Whether interest in the loan for acquisition under Article 111(5) of the Local Tax Act is included in the tax base for acquisition tax (affirmative)

In view of the provisions of the proviso of Article 111(1) of the Local Tax Act, Article 16 subparag. 11, Article 59-2(3) of the Enforcement Decree of the Corporate Tax Act, and Article 33(1)1, and Article 124-2(2) of the Enforcement Decree of the same Act, the owner of an object of taxation shall be deemed to have made a substantial investment in order to acquire it. The amount of indirect demand itself shall be deemed as the acquisition tax base. Therefore, if a loan has been borrowed to acquire it under Article 111(5) of the Local Tax Act, the interest, i.e., the interest, if it is apparent that the

Article 111 of the Local Tax Act

New Industries Corporation

The head of Jung-gu Seoul Metropolitan Government

Seoul High Court Decision 83Gu554 delivered on May 6, 1985

The judgment below is reversed and the case is remanded to Seoul High Court.

The ground of appeal No. 1 by the defendant litigation performer is examined.

Article 111(5) of the Local Tax Act provides that acquisition price shall be proved by acquisition from associations of this State, Si, Gun, and local governments from abroad, acquisition by judgment, notarial deed, corporate account books, contracts, and other certificates as prescribed by the Presidential Decree, and acquisition by public auction shall be the tax base of acquisition tax, notwithstanding the proviso of Article 111(2) and Article 111(3) of the same Act, since actual acquisition price or annual installments amount is obvious by objective data under which the acquisition price which serves as the tax base of acquisition tax is reliable, and there is no reason to regard the current base of market price as the tax base of acquisition tax, and the amount of direct and indirect investment in the acquisition of the object of taxation is not reduced as the tax base of acquisition tax, and if there is a loan for such acquisition, the interest on such loan shall be added to the tax base of acquisition tax by making it clear that the interest on the loan is indirectly invested in the acquisition, i.e., acquisition tax, and the amount of interest paid by a corporation under Article 111(1)3 of the Enforcement Decree of the Corporate Tax Act shall be added to the tax base of interest paid for the same business year.

Therefore, the court below should deliberate and decide on whether construction funds and 67,57,478 won are paid as interest of construction funds borrowed by the plaintiff for the purpose of acquiring movable property of this case, and further, if the interest payment was paid for the purpose of acquiring the taxable object of this case, the court below should decide on whether the total amount of the acquisition tax base should be determined. However, without any data, the court below erred by misapprehending the legal principles as to the tax base under the Local Tax Act as well as by failing to exhaust all necessary deliberations, since the interest payment of the construction funds of this case was specific rent for the purpose of acquiring it, and not by paying interest thereon, it can be recognized that the plaintiff included only as the head of the corporation, and the actual acquisition value or annual installment payment amount under Article 111(5) of the Local Tax Act as stated in the above Article 11 of the Local Tax Act in the corporate accounting necessity. The court below erred by misapprehending the legal principles as to the tax base under the Local Tax Act.

Therefore, the judgment of the court below is reversed and the case is remanded to the Seoul High Court for further proceedings consistent with this Opinion, since the necessity of the judgment on the second and third grounds for appeal is not exempt from reversal, and the judgment of the court below is so decided as per Disposition by the assent of all participating judges.

Justices Lee Chang-chul (Presiding Justice)