Cho High Court Decision 2013 Deputy 1742 ( October 22, 2013)

In case of spending research and development expenses with financial resources from a national subsidy, a political party shall exclude a tax credit for research and development expenses.

In the event that a national subsidy is paid as a financial resource for research and development expenses, a tax credit exclusion provision was newly established on February 18, 2010 to exclude a tax credit for research and development expenses. Since Article 2 to Article 2 of the Addenda of the Act on January 1, 2010 provides that it shall be applied from the business year beginning after January 1, 2010, it is reasonable to exclude the plaintiff from

Tax credit for research and human resources development expenses under Article 9 of the Enforcement Decree of the Restriction of Special Taxation Act

2013Guhap4591 Disposition of revocation of refusal to correct corporate tax

AAA, Inc.

○○ Head of tax office

April 24, 2014

May 22, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s rejection disposition against the Plaintiff on March 13, 2013 regarding the claim for reduction or correction of the amount of duty KRW 000,000,000,000, which was issued on March 6, 2013, is revoked.

1. Details of the disposition;

A. In 2008 and 2009, the Plaintiff received government subsidies from the State, etc. (hereinafter “State subsidies”), and disbursed 0,000,000,000,000 as research and development expenses in the year 209,000,000,000 as 0,000,000,000 in the year 201, and 00,000,000,000 in the year 201 (hereinafter “research and development expenses disbursed with government subsidies”).

B. On March 31, 2011, the Plaintiff reported the tax base and tax amount of corporate tax for the business year 2010, and reported 0,000,000,000 won, which is the aggregate of the research and development expenses in this case and the research and development expenses disbursed at its own expense, as the tax credit amount for research and human resources development expenses.

C. The Defendant directed the Plaintiff to file a revised return on the ground that the instant research and development expenses are not eligible for tax credit. Accordingly, the Plaintiff submitted a revised return on the corporate tax base and tax amount with the amount of tax credit for research and development expenses of KRW 00,000,000 on December 31, 2012, and received the said amount as the tax credit amount.

라. 이후 원고는 다시 이 사건 연구개발비를 구 조세특례제한법(2010. 1. 1. 법률 9921호로부 개정된 것, 이하 '구 조세특례제한법'이라 한다) 소정의 연구ㆍ인력개발비 세액공제의 대상으로 보아 2013. 3. 6. 피고에게 연구ㆍ인력개발비 세액공제액을 0,000,000,000원으로 하여 법인세 과세표준 및 세액의 경정청구서를 제출하고 000,000,000원(= 0,000,000,000원 − 이미 세액공제받은 000,000,000원)의 세액환급청구를 하였다.

E. However, on March 13, 2013, the defendant rejected the plaintiff's request for correction on the ground that "the research and development expenses in this case were invested from the government subsidy, so it cannot be viewed as subject to tax credit for research and development expenses." (hereinafter "the disposition in this case").

F. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on April 14, 2013, but was dismissed on October 22, 2013.

G. Meanwhile, on April 2013, the Defendant returned KRW 00,000,000 to the Plaintiff’s decision of tax credit for research and human resources development expenses for the business year 2010 by recalculationing the details of use of research and development expenses and the amount reduced or exempted.

H. Accordingly, the Plaintiff is disputing the disposition rejecting the correction of the amount of tax deducted on the portion of KRW 000,000,000,000, excluding the amount of tax credit already refunded from the amount of tax credit of KRW 000,000,000, which was calculated on its own, including the instant research and development expenses in the business year 2010 (=00,000,000 + 00,000,000).

Evidence Nos. 2 through 8 of the Grounds for Recognition A, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

① Article 9(8) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22037, Feb. 18, 2010; hereinafter “former Enforcement Decree of the Restriction of Special Taxation Act”) (hereinafter “the newly established provision”) excluding tax credit for research and human resources development expenses disbursed with government subsidies not self-expenses, was newly established on February 18, 2010, and thus, the newly established provision to be applied from January 1, 2010 to the first business year (i.e., the business year 2010) that begins after January 1, 2010 constitutes a so-called quasi-appeal legislation where the relevant law of tax law is amended during the taxable year. The newly established provision of this case prevents the Plaintiff from receiving tax credit for this portion in cases where government subsidies already paid in 2008 and 2009 were disbursed for research and development expenses for 2010 years, and thus, the purpose of the newly established provision of this case is to further protect the Plaintiff’s financial interest.

② With respect to the Plaintiff’s calculation of the corporate tax amount for the business year 2010, the instant new provision excluded the tax credit for the instant research and development expenses due to the exclusion of the said tax credit due to the instant new provision, which was paid with a national subsidy prior to 2010 and already disbursed as research and development expenses before 2010, resulting in unreasonable discrimination against another company that received the said tax credit, and thus, the instant disposition based thereon goes against the principle

③ In interpreting the newly established provisions of this case, the interpretation that a national subsidy already received prior to 2010 is excluded from the scope of tax deduction even if it is paid as research and development expenses, etc. in 2010 is contrary to the interpretation of tax laws and regulations pursuant to the principle of no taxation without law, and it unfairly infringes on the taxpayer’s property rights as stipulated in Article 18(1)

④ The newly established provision of this case results in the reduction of the amount of tax to be deducted than the amount of tax to be deducted under the previous Act and subordinate statutes, which leads to the payment of a larger amount of tax. Therefore, the newly established provision of this case is directly related to the imposition of tax. Therefore, under the principle of no taxation without representation, it should be enacted by the legislation of the National Assembly pursuant to the legislation of the National Assembly, and without such legislation, the newly established provision of this case goes against the principle

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the Plaintiff’s first argument

Even in cases where the relevant statutes are amended, an administrative disposition is in principle based on the amended Acts and subordinate statutes enforced at the time of the disposition, unless otherwise specified in the transitional provisions, and the standards set thereunder. Even in cases where the amended Acts and subordinate statutes provide more unfavorable legal effects in relation to the property rights of the people with respect to the existing facts or legal relations, if such facts or legal relations are not already completed or terminated before the amended Acts and subordinate statutes enter into force, they shall not be deemed an infringement of property rights by retroactive legislation prohibited under the Constitution. With respect to the application of such amended Acts and subordinate statutes, if the people’s trust in the continuation of the statutes before the amendment is recognized to have more protected than the public demand in relation to the application of the amended Acts and subordinate statutes, the application may be restricted to protect the people’s trust. In addition, in order to determine whether the principle of trust protection is violated, on the one hand, comprehensive comparison and balancing the public interest purpose to be realized through the amended Acts and subordinate statutes (see, e.g., the value of infringing interest, degree of infringement, degree of damage caused by trust infringement, method of trust infringement, etc.

Examining the newly established provisions in this case in light of these legal principles, the newly established provisions in this case were newly established on February 18, 2010, and Article 2 of the Addenda Article 2 to the tax year that begins on January 1, 2010. This provision does not apply retroactively to the tax legal relationship that has been completed or terminated (in the case of corporate tax, it is at the time of establishment of the tax obligation at the end of the business year that ends at the end of the taxable period, and in the case of this case, it shall be at the time of establishment of the corporate tax obligation on December 31, 2010). It is expected that the relevant Acts and subordinate statutes in this case constitute a kind of integrative legislation, which is amended, and that the extent of infringement of the Plaintiff’s trust interest is expected.

① However, the purpose of the Restriction of Special Taxation Act is to contribute to the sound development of the national economy by ensuring fair taxation and efficiently implementing tax policies by prescribing the special cases of tax reduction and exemption as well as special cases of taxation, such as heavy taxation, and the restriction thereof. ② Expected tax reduction and exemption and trust are not originally permanent but merely new, interim, and temporary due to the amendment of the relevant Acts and subordinate statutes. ③ The Plaintiff itself was aware of the establishment time of corporate tax liability for the business year 2010, and it appears that the amendment of the relevant Acts and subordinate statutes can have been anticipated to some extent due to the characteristics of the relevant tax laws and regulations. ④ Unlike the case where the purpose of the newly established provisions of this case intending to exclude the government subsidy from the tax credit with its own expenses is to exclude the tax credit from the tax credit, and thus, it cannot be said that the Plaintiff’s trust in the application of the former Restriction of Special Taxation Act 200 or 200 research and development expenses should not be deemed to have been used as the financial resources for the public interest of 10 or 20% national government subsidy (the Plaintiff’s trust in the new government subsidy).

Therefore, the plaintiff's above assertion is without merit.

2) Judgment on the second argument by the Plaintiff

The principle of equality under Article 11(1) of the Constitution is the principle of tax equality to be realized in the field of tax law. It is the principle that the imposition and collection of taxes must be fair and equal in accordance with the taxpayer's ability to pay taxes, and discrimination or preferential treatment against a specific taxpayer shall not be permitted without reasonable grounds. However, in a case where there are reasonable grounds, discrimination among taxpayers shall be exceptionally permitted. However, in a case where there are reasonable grounds, there is a broad freedom to form a tax law, and today, a tax legislative person may consider various perspectives in order to achieve the national economy, financial policy, and social policy objectives in addition to the purpose of securing financial revenue.

In this case, due to the new provision of this case, if a company that received a subsidy from the State in 2009 uses all research and development expenses in the Han Sea in 2009 and uses the remaining subsidy as research and development expenses in 2009, it is true that there is a difference in the amount of tax deduction between the two.

However, in order to secure tax revenue according to the current economic situation at the time, the legislators can implement tax policies with broad discretion on the scope of tax deduction and at the time of its implementation, and also have the freedom to form such policies. Accordingly, the newly established provisions of this case also have been enacted for the public interest purpose of promoting national policies more efficiently by securing tax revenue by partly excluding the benefits from the existing amount of tax deduction on research and development funds. Ultimately, the implementation of the amended Acts and subordinate statutes cannot be deemed as a discrimination without reasonable grounds with the difference in tax credit as above due to the implementation of the amended Acts and subordinate statutes (if it is deemed that such a case violates the principle of equality, the implementation of the amended Acts and subordinate statutes must be restricted at the same time

Therefore, the plaintiff's assertion on the premise of violating the principle of equality is not reasonable.

3) Judgment on the third assertion by the Plaintiff

Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring any special circumstance, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of fair taxation to strictly interpret that a provision clearly deemed a preferential provision among the requirements for reduction and exemption accords with the principle of fair taxation (see, e.g., Supreme Court Decision 2008Du11372, Aug. 20, 2009).

In light of the above legal principles, ① Article 9(8) of the former Enforcement Decree of the Restriction of Special Taxation Act, which is the newly established provision of this case, provides that the amount of research and development funds paid with contributions, etc. under Article 10-2 of the Act shall be excluded from the calculation of new growth engine research and development expenses, source technology research and development expenses, and general research and human resources development expenses under Article 10(1) of the Act, and Article 2(1) of the Addenda provides that "from the taxable year beginning on January 1, 2010", Article 10(1) of the former Restriction of Special Taxation Act provides that the time of the disbursement of research and development expenses shall be the taxable year of the tax credit, ② the national subsidy paid before and after January 1, 2010 shall be subject to tax credit if it is paid with research and development expenses, ③ The aforementioned new provision cannot be interpreted differently from the principle of no taxation without law to ensure efficiency of tax policies by excluding the payment of research and development expenses from the national subsidy.

Therefore, the plaintiff's above assertion on a different premise is without merit.

4) Judgment on the plaintiff's fourth argument

The principle of no taxation without law, which is stipulated in Articles 38 and 59 of the Constitution, is the core contents of the principle of no taxation without law and the principle of clarity of taxation requirements, and the principle of no taxation without law clearly provides for the requirements of taxation, thereby guaranteeing the property rights of the people and ensuring the legal stability and predictability of economic life at the same time. However, while observing the principle of no taxation without law, detailed matters that should be followed by changes in economic reality or development of professional technology should be delegated to administrative legislation with more scarcity than the formal law

Article 10(1) of the former Restriction of Special Taxation Act grants benefits to a certain portion of tax deduction in order to encourage an enterprise to invest in research and human resources development. However, rather than uniformly granting tax credit for all research and human resources development expenses, it is necessary to classify the kinds of research and human resources development expenses, to flexibly and flexibly regulate the scope subject to deduction in response to changes in economic situation, the direction of tax policies, and relevant laws and regulations. ② It is inappropriate for the National Assembly to understand the above matters in the laws enacted by the National Assembly, and to select the specific scope of research and human resources development expenses subject to tax credit is professional, technical, and variable, so it is necessary to delegate them to subordinate laws and regulations; ③ In addition, in light of the form and content of Article 10(1) of the former Restriction of Special Taxation Act, it seems possible for the citizens to sufficiently be expected that the research and human resources development expenses subject to tax credit under Presidential Decree exist; ④ Article 10(1) of the former Restriction of Special Taxation Act also does not violate the principle of no taxation without law.

Therefore, the plaintiff's above assertion is without merit.

5) Ultimately, the instant disposition rejecting the Plaintiff’s claim for reduction or correction of the amount of tax refund by excluding the instant research and development expenses from those eligible for the deduction of the amount of research and human resources development expenses is lawful.

3. Conclusion

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