Cho High Court Decision 2010Du3029 ( October 16, 2011)

Unless earned income is withheld from withholding, comprehensive income tax may be imposed on the income earner.

In light of the basic purport of affirming the imposition of global income tax, etc. on the income subject to withholding, it is unreasonable to exclude the income from the scope of liability to pay income tax which comes into existence at the end of the relevant year due to the omission of withholding tax on income, as long as income subject to withholding is omitted, the income subject to withholding may be imposed

2011Guhap15787 Global Income and Revocation of Disposition

Maximum XX

○ Head of tax office

August 19, 2011

October 7, 2011

1. The plaintiff's claim is dismissed.

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

The disposition of imposition of global income tax of KRW 43,806,550 against the Plaintiff on June 7, 2010 shall be revoked.

1. Details of the disposition;

A. The plaintiff is the representative director of the company XX Information and Communications Co., Ltd. (hereinafter referred to as "non-party company") that operates the business specializing in the management of computer systems, and around 2005, the non-party company received 110,615,000 won (the total value of the value-added tax plus the value-added tax is 121,676,50 won) from the O system of the corporation and then included the amount equivalent to the above amount in the account book, and then created the so-called non-financing by receiving one copy of the tax invoice for processing that does not engage in real transactions (hereinafter referred to as "tax invoice of this case"). Upon reporting value-added tax and corporate tax, the plaintiff reported the amount equivalent to the above amount from the output tax amount by deducting the amount equivalent to the above amount from the amount of the value-added tax and reported the amount of

B. After confirming that the instant tax invoice is a processed tax invoice issued without a real transaction, the head of the AAA tax office did not deduct the input tax amount after deducting the input tax amount at the time of return of value-added tax on October 16, 2009, and subsequently notified correction and notification of the value-added tax and corporate tax by excluding the value of supply included in the deductible expenses at the time of return of corporate tax by the non-party company. On the other hand, the AA tax office disposed of KRW 121,676,500 for the supply price of the said tax invoice to the Plaintiff and then

C. On December 31, 2009, the Defendant imposed KRW 43,806,550 on the Plaintiff on June 7, 2010, according to the taxation data received from the head of AA tax office, the Plaintiff did not report and pay the tax base and tax amount on the amount of income changed until December 31, 2009 (hereinafter “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on September 6, 2010, but the Tax Tribunal dismissed the said appeal on February 16, 201.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 5, Eul evidence 1 to 5, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

According to Article 192 (1) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19890 of Feb. 28, 2007), where the location of the corporation is unclear or it is impossible to serve the notice, or where a corporation falls under Article 86 (1) 1, 2 and 4 of the National Tax Collection Act, it may impose a direct tax on the income earner by notifying the shareholder and the resident who received the disposition of bonus or other income. However, the disposition of this case on which the non-party company did not withhold the income tax directly from the non-party company is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

Article 67 of the Corporate Tax Act (amended by Presidential Decree No. 8141 of Dec. 30, 2006) and Article 106 (1) 1 proviso of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19328 of Feb. 9, 2006) provide that "where it is clear that the amount included in gross income has been released from the company in determining or revising the corporate tax base, but it is unclear to whom ownership is unclear, it shall be deemed that it has been reverted to the representative." The recognition contribution system under the Corporate Tax Act is not based on the fact that such a representative has generated income, but rather on certain facts that can be recognized as such act in order to prevent unfair acts under the tax law, the representative is obligated to pay the income tax on Class A, regardless of whether it actually reverts to himself or herself (see, e.g., Supreme Court en banc Decision 2008Da429709, Sept. 18, 2008).

In light of the above legal principles, since the health team and the head of AA tax office were to take the disposition of this case as the representative recognition prize for the plaintiff, the plaintiff is obligated to pay the Class A labor income tax on the amount of the disposition of this case to the defendant. Thus, the defendant may impose a comprehensive income tax on the plaintiff even if the plaintiff omitted the withholding tax on the non-party company. Therefore, the disposition of this case is legitimate.

3. Conclusion

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