Seoul Administrative Court-2017-Gu Partnership-52658 (2017.06.01)

Article 55(2) of the Corporate Tax Act cannot be deemed as infringing on property rights under the Constitution or violating the principle of no taxation without the law.

Article 55(2) of the Corporate Tax Act cannot be deemed as infringing on property rights under the Constitution or violating the principle of no taxation without the law.

Article 55 of the Corporate Tax Act

2017Nu54267 Revocation of revocation of revocation of corporate tax rectification

Plaintiff and Appellant

Bright Industry Ltd.

Defendant, Appellant

○ Head of tax office

Seoul Administrative Court Decision 2017Guhap52658 decided June 1, 2017

October 13, 2017

December 15, 2017

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The decision of the first instance is revoked. The defendant's rejection disposition against the plaintiff on August 31, 2016 is revoked as corporate tax of 56,520,200 won for the business year of 2016.

1. Quotation of the reasons for the judgment of the first instance;

The reasoning of this judgment is as follows, among the reasons for the judgment of the court of first instance, adding the following among the reasons for the judgment of the court of first instance, and it is identical to the reasons for the judgment of the court of first instance except for adding the judgment as referred to in paragraph (2) below with regard to the matters alleged by the plaintiff in the court of first instance. Thus, it is acceptable

“The tax amount calculated under the provisions of Article 55(1) of the Corporate Tax Act, on the basis of the three sides at the lower end of the two pages” shall be added.

2. Additional matters to be determined;

A. Summary of the plaintiff's assertion

Article 55(2) of the Corporate Tax Act (hereinafter referred to as “instant provision”) provides for the purpose of correcting the problems that distort the progressive structure of corporate tax by calculating the calculated tax base per year more than in the case of a corporation whose business year is less than one year when the tax base is shorter than the period of the business year, and when the tax rate is applied to the tax base of a corporation whose business year is less than one year, the above provision is applicable only to a case where the income amount varies depending on the business period of a corporation, and the case where only a single type of revenue amount, which is irrelevant to the business period of a corporation, constitutes the tax base, is not reasonable to apply the above provision. Nevertheless, the instant provision stipulates that the tax base for all revenues, regardless of whether the revenue amount varies according to the business period of a corporation both on a one-time basis and a one-time revenue amount, shall be applied as a condition against the principle of no taxation without law and unconstitutionality against the Constitution.

B. Determination

The selection of taxable objects subject to taxation is, in principle, a matter of legislative policy by comprehensively taking into account all the political, economic, social, and cultural conditions and financial situation of a country. This is, in principle, belonging to the legislative discretion. Thus, insofar as the result of the legislators’ selection of taxable objects under the tax law does not considerably unreasonable beyond the scope of reasonable discretion, it cannot be deemed as a violation of the principle of equal taxation, the principle of guaranteeing property rights, and the principle of no taxation without law (see Constitutional Court Order 2004HunBa100, Feb. 23, 2006). Furthermore, the provision on the calculation of tax base is also a matter of legislative policy determination in consideration of the characteristics of the pertinent tax item, systematic and organic relationship with other relevant regulations, and the legislative discretion is a matter of principle, and thus, the provision on the calculation of tax base established by the legislators does not violate the principle of equal taxation, the principle of guaranteeing property rights, and the principle of no taxation without law (see Constitutional Court Order 201HunBa14, Feb. 19, 2011).

In addition, under the principle of no taxation without law, the requirements for taxation, non-taxation, or tax reduction and exemption shall be avoided, and the interpretation of tax laws and regulations shall not be extensively interpreted or analogically interpreted without reasonable grounds (see, e.g., Supreme Court Decision 2008Du11372, Aug. 20, 2009).

In light of the above legal principles, the application of the provision of this case to the tax rate belongs to the legislative discretion. ② The provision of this case does not provide that the application is different from those related to the headquarters of the business period under the law. ③ In the Plaintiff’s assertion, it is difficult to calculate corporate tax because the income subject to taxation is ambiguous, and ④ the income tax is individually and specifically listed in accordance with the origin of the income subject to taxation from the standpoint of the source of income. On the other hand, Article 14(1) of the Corporate Tax Act provides that the income of a domestic corporation for each business year shall be calculated by deducting the total amount of deductible expenses belonging to the business year from the total amount of gross income belonging to the business year, without distinguishing the income amount from the total amount of the business year, and without calculating corporate tax on each business year, if the business year is less than 1 year, it is difficult to accept the Plaintiff’s claim that the amount of income subject to taxation is obviously unreasonable by applying the tax base for 1 year to the calculation of corporate tax based on the number of months in the pertinent business year.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.