Cho High-2017-Seoul Government-1049 (Law No. 13, 2017)

Whether the plaintiff is the actual business operator of the place of this case, and whether the exclusion period expires.

Despite the registration as the representative director on the corporate register, it shall be attested by the party asserting that the circumstances are not the actual representative.

Article 67 of the Income Tax Act

2017Guhap7749 Other Global Income and Revocation of Disposition

a

AA Head of the Tax Office

April 6, 2018

April 20, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The disposition of imposition of the global income taxx (including additional tax) on the Plaintiff on December 1, 2016 by the Defendant on December 1, 2016 shall be revoked (the Plaintiff stated the purport of the claim on the second date for pleading).

1. Details of the disposition;

A. From November 21, 2006, the Plaintiff was registered as the representative director in the corporate register of BB World Co., Ltd. (hereinafter “B World Co., Ltd.”) from November 21, 2006. The non-party company, which was engaged in trade business, was closed on August 2004 and closed on August 20, 2008. The non-party company was dissolved on December 2, 2013 under Article 520-2 of the Commercial Act and was settled on January 2, 2016.

B. On June 1, 2016, the director of the tax office issued the processing tax invoice for x members from DD in the business year 2007, and revised the corporate tax of the non-party company, considering that the amount equivalent to the above processing purchase amount was not clear since it was out of the company, the non-party company's representative director was disposed of as bonus for the plaintiff and notified the defendant, who is the head of the tax office having jurisdiction over the domicile of the plaintiff. Accordingly, on December 1, 2016, the defendant notified the plaintiff of the correction and notification of the global income tax x (including additional tax) for the year 2007 (hereinafter referred to as the "disposition in this case").

C. On February 13, 2017, the Plaintiff filed an appeal with the Tax Tribunal against the instant disposition, but the Tax Tribunal rendered a decision to dismiss the Plaintiff’s claim on June 13, 2017.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 4, 6, Eul evidence Nos. 2 and 3, the purport of the whole pleadings

2. Determination

A. The plaintiff's assertion

1) Since the actual representative director and the operator of the non-party company are b, the instant disposition based on the premise that the Plaintiff is the representative of the non-party company is unlawful as it violates the principle of substantial taxation.

2) The instant disposition was made after the lapse of five years of exclusion period for imposition, and is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether the instant disposition is lawful

A) The purpose of the system is not to establish the basis of the fact that such income has accrued to the representative, but to consider certain facts that can be recognized as such in order to prevent an unfair act under tax laws by a corporation as a bonus to a unconditional representative regardless of their substance. The representative is substantially the representative who operates the company. Thus, even if a person is registered as the representative in the corporate register of the company, if the company did not actually operate the company, the income of which the company is missing cannot be imposed on him/her (see, e.g., Supreme Court Decision 87Nu1238, Apr. 12, 198).

However, the fact that it constitutes a representative director of a corporation which is liable to dispose of income due to recognition shall be proved by the data, such as the certified transcript of corporate register, and even if it is registered as a representative director on the corporate register, it shall be attested by the party asserting the fact (see, e.g., Supreme Court Decision 2010Du116, Dec. 23, 2010).

B) As seen earlier, the Plaintiff was registered as the representative director on the corporate register of the non-party company from November 21, 2006 to December 3, 2013, which was the day following the order to dissolve the Plaintiff. If so, the Plaintiff must prove that the Plaintiff was not a real representative of the non-party company. In light of the overall purport of the pleadings, the Plaintiff acquired the benefits, namely, ① around 2006, 6,000 shares of the non-party company from c to c around 2006, the Plaintiff became the representative director and the largest shareholder of the non-party company. ② The Plaintiff was paid the sum of x members from the non-party company in the year 2007, ③ The Plaintiff and the non-party company’s earned income were merely D, and the Plaintiff and the non-party company did not appear to have received the benefits from 2007 to 207, based on the evidence presented by the Plaintiff from 2007 to 200.

C) If so, the disposition of income, which the Plaintiff deemed as the representative of the non-party company, is lawful. Accordingly, the disposition of this case imposing the income tax on the Plaintiff is also lawful.

2) Whether the exclusion period has expired

A) Article 26-2(1)1 of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 2011) provides that “where a taxpayer evades a national tax, obtains a refund or deduction due to a fraudulent or other unlawful act, it shall be ten years from the date on which the national tax can be imposed, and where a taxpayer does not fall under subparagraph 1, it shall be five years from the date on which the national tax can be imposed.”

Article 26-2(1)1 of the Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 2011; hereinafter referred to as "amended Act") newly established a provision that "if national taxes evaded or refunded or deducted by unlawful act are corporate tax, it shall be ten years from the date on which income tax can be imposed on the amount disposed of pursuant to Article 67 of the Corporate Tax Act (hereinafter referred to as "amended Act")." Article 2(1) of the Addenda of the Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 2011) provides that "the amended provisions of the latter part of Article 26-2(1)1 of the Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201) shall apply from the amount disposed of in accordance with Article 67 of the Corporate Tax Act for the first time after January 1,

The above amended provisions stipulate that the exclusion period of imposition of corporate tax shall be five years in principle for the global income tax due to bonus disposal or recognition on the ground that even if the exclusion period of imposition of corporate tax falls under ten years due to a corporate fraud or other unlawful act, it is difficult to view that the representative of a corporation has been expected to be subject to the bonus disposal or disposal due to the name of the portion belonging to him/her, and thus, it is difficult to view that the exclusion period of imposition of corporate tax is in principle five years (see, e.g., Supreme Court Decisions 2007Du20959, Jan. 28, 2010; 2007Du11382, Apr. 29, 2010). In addition, Article 9-2 subparagraph 2 of the former Punishment of Tax Evaders Act (wholly amended by Act No. 9919, Jan. 1, 2010) that excludes the application of the Punishment of Tax Evaders Act on the amount disposed of by the corporate tax act and other unlawful act.

B) Meanwhile, according to the purport of Articles 38 and 59 of the Constitution that provides for the no taxation without law, the provision imposing new tax liability or tax liability more aggravated than the previous one may be applicable only when the requirements for imposition are met after the enforcement thereof, and, barring any special provision, it is not permissible to apply retroactively to the facts requiring taxation that have already been closed prior to the enforcement date (see, e.g., Supreme Court en banc Decision 2008Du17363, Sept. 2, 201). However, the retroactive legislation under Article 13(2) of the Constitution or Article 18(2) of the Framework Act on National Taxes refers only to the legislation that has the so-called so-called genuine nature that regulates the past completed facts and legal relations, and where new legislation is applied from the first commencement of the exclusion period after the enforcement of the amended Act, it is possible to apply the same to the legislation of the said Act, 200Du40689, Sept. 14, 201; 2006Du96168.

If the supplementary provision of the amended provision is interpreted only in accordance with the language and text, the exclusion period of income tax or corporate tax from such disposition may always be ten years, but as seen earlier, it is not allowed to do so. Therefore, even if the disposition of income was made after January 1, 2012, if the exclusion period has already expired before the enforcement date of the amended provision, it shall not be applicable to the supplementary provision of the amended provision (see, e.g., Supreme Court Decision 2013Du25627, Mar. 27, 2014). However, if the income tax was first disposed of after January 1, 2012 without the exclusion period, it shall be applied to the supplementary provision of the amended provision, and the exclusion period of imposition due to the disposition of income tax from such evasion shall be ten years (see, e.g., Supreme Court Decision 2015Du1574, Apr. 1, 2015).

C) The instant disposition is a disposition imposing global income tax on the Plaintiff for the tax year 2007. The global income tax for the tax year 2007 ought to take effect from the date following May 31, 2008, which is the filing deadline for the instant disposition. As such, the exclusion period for imposition was five years as of January 1, 2012, which is the enforcement date of the amended provision. Furthermore, the instant disposition was imposed on the Plaintiff by the Defendant’s disposal of bonus after January 1, 2012, and thus satisfies the requirements prescribed in the Addenda of the amended provision. Accordingly, the amended provision may apply to the instant disposition.

D) On June 1, 2016, the director of the tax office revised the corporate tax of the non-party company on the grounds that "the non-party company received the x members' purchase tax invoice from DD in the business year 2007," and the non-party company was disposed of as bonus to the plaintiff who was the representative director of the non-party company, on the ground that the amount equivalent to the above x members' purchase amount was not clear since it was out of the company.

Since the non-party company’s evasion of corporate tax by making a transaction of goods supplied without any actual transaction can be deemed as a “Fraud or other unlawful act,” the imposition of income tax on the bonus amount disposed of in relation to the corporate tax evaded, the exclusion period for imposition of 10 years shall apply in accordance with the amended provisions. Thus, the exclusion period for imposition of global income tax, which is the disposition imposing global income tax for 2007, shall be until May 31, 2018, and the disposition of this case is lawful as it was conducted within the exclusion period for imposition.

Therefore, the plaintiff's assertion about the exclusion period of imposition is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.