Both parties to the lawsuit (Attorneys Jeong Byung-chul et al., Counsel for the plaintiff-appellant)

The director of the tax office

August 22, 2007

1. The Defendant’s imposition disposition of KRW 268,736,63 of corporate tax for the business year 199 against the Plaintiff on June 1, 2004 in excess of KRW 241,862,93 of corporate tax for the business year 200; the imposition disposition of KRW 623,039,117,150 of corporate tax for the business year 200; the amount exceeding KRW 557,150 of the imposition disposition of KRW 919,09,380 of corporate tax for the business year 2001; the amount exceeding KRW 827,189,440 of the imposition disposition of KRW 9,380 of corporate tax for the business year 200; the imposition disposition of KRW 503,272,680 of corporate tax for the business year 200; the imposition disposition of KRW 383,781,620 of corporate tax for the business year 203; the imposition disposition of KRW 37039,709,207.7

2. The plaintiff's remaining claims are dismissed.

3. 9/10 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The defendant's disposition of imposition of corporate tax of 268,736,63 won for the business year of 1999, corporate tax of 623,039,252 won for the business year of 200, corporate tax of 919,09,380 won for the business year of 2001, corporate tax of 503,272,680 won for the business year of 2002, corporate tax of 383,781,620 for the business year of 203, corporate tax of 2003, corporate tax of 383,781,620 for the business year of 204, and corporate tax of 10,972,520 for the business year of 204

1. Details of the disposition;

The following facts may be acknowledged, either in dispute between the parties, or in combination with the whole purport of the pleadings, on each entry of evidence Nos. 1, 2, and 1-6, and evidence No. 2:

A. The Plaintiff, as a general trading company engaged in the trade business from 199 to 2004, purchased goods, such as Guideper, gold, whiteum, bean, and smoke, from a foreign corporation with no permanent establishment in Korea (hereinafter referred to as “foreign exporter”), and sold them to a foreign corporation residing in a third country (hereinafter referred to as “overseas importer”) (hereinafter referred to as “instant transaction”) (the type of the instant transaction, items and amount by trade period, and amount by trade period, are as shown in Table 1 and Table 2, and the detailed details of the transaction are as described in the attached sheet of collection”).

Table 1

본문내 포함된 표 구 분 거 래 내 용 1. 유형(금) 해외수출자 ⇒ 원고 : $205/ton(180일 Shipper's Usance) 원고 ⇒ 해외수입자 : $200/ton(T/T방식) 2. 유형 (백금) 해외수출자 ⇒ 원고 : $205/ton(180일 Shipper's Usance) 원고 ⇒ 해외수입자 : $200/ton(T/T방식) 3. 유형 (구리) 해외수출자 ⇒ 원고 : $205/ton(180일 Shipper's Usance) 원고 ⇒ 해외수입자 : $200/ton(T/T방식) 4. 유형 (콩) 해외수출자 ⇒ 원고 : $205/ton(180일 Shipper's Usance) 원고 ⇒ 해외수입자1 : $210/ton(190일 Shipper's Usance) 원고 ⇒ 해외수입자2 : 해외수입자1 채권을 $200/ton에 할인 5. 유형 (아연) 해외수출자 ⇒ 원고 : $205/ton(180일 Shipper's Usance) 원고 ⇒ 해외수입자 : $200/ton(일람불 Shipper's Usance )

* Speper's Usance: Interest on deferred payment for extension of credit by seller

* T/T (Telelelevis) method

Before the exporter delivers the goods, the importer makes payments after delivery or at the same time after delivery to the exporter.

Table 2: Table 2>

(unit: %) %,00 won

Baglass (7.7) White (7.6) Baly (25.7) (2) gold (3.7) (2) from August 17, 1999 to December 31, 2001;

B. In purchasing from an overseas exporter as seen earlier, the Plaintiff purchased the bill of exchange for 180 days under the terms of payment for the settlement of 190 days for the purchase from an overseas exporter. The Plaintiff sold the bill to an overseas exporter by T/T method, 190 days for the purchase from the bank that opened the letter of credit. In the case of T/T method, the export price was immediately paid for the purchase from the bank. In the case of a "Speper" method, the Plaintiff was exported by the means of collection under the letter of credit under the terms and conditions of L/C, and then was issued for the bill of exchange and collected the price for the sale on the basis of the letter of exchange and the letter of credit opened by the acceptance and the overseas importer. At the time of 'Speper' management for the above purchase, the Plaintiff paid the purchase price for the bill to the bank that opened the letter of credit.

다. 서울지방국세청장이 원고에 대한 세무조사를 실시하여, “원고가 해외수출자로부터 180일의 Shipper's Usance 조건으로 재화를 매입하여 해외수출자에게 위 매입에 따른 대금을 지급할 때까지의 이자를 가산한 금액을 매입대금으로 지급하는 반면, 해외수입자로부터 T/T 방식 등에 따라 위 매도에 따른 대금을 지급받아 원고가 해외수출자에게 대금을 지급하는 Shipper's Usance 기간(180일) 동안 사실상 자금차입효과를 얻었으므로, 별지 추징명세서 기재와 같이 원고가 해외수출자에게 지급한 Shipper's Usance 이자 25,841,532,306원을 원천징수분 이자소득세의 세율로 Gross-Up＊하여 계산한 금액인 28,842,579,027원이 원고가 원천징수하여야 하는 과세표준인 이자소득에 해당된다“는 내용의 과세자료를 피고에게 통보하였다.

＊ Gross-Up 방식 : 'gross up'은 ‘공제하기 전의 액수로 늘리다’를 의미하는 말로, 여기서는 해외수출자의 국내원천이자소득 과세표준을 산정하는 한 방식으로 계산방식은 다음과 같다. 국내원천이자소득 과세표준=Shipper's Usance 이자÷(1-원천징수세율 10%).

D. According to the above notified taxation data on May 6, 2004 and June 1, 2004, the Defendant rendered a decision on May 6, 2004 as to the corporate tax for the business year of 1999 pro rata 28,603,380 won for the interest income withheld at source (hereinafter “original unit” in relation to the tax amount”) and 336,301,960 won for the business year of 200,164,190 won for the business year of 200, and 919,09,380 won for the business year of 2001, for the business year of 2003,272,680 won for the business year of 202, for 383,781,620 won for the business year of 203 pro rata 383,781,620, for the business year of 2004, 972,301, etc.

E. On July 15, 2004, the Plaintiff filed an appeal with the National Tax Tribunal on the initial disposition of this case. On September 15, 2006, the National Tax Tribunal recognized the white part of the transaction of this case as a normal trade and decided to reduce or correct the amount of KRW 28,603,380 for the business year of 199, and KRW 67,565,297 for the business year of this case, and KRW 126,124,946 for the business year of 200, and KRW 268,736,63 for the business year of 1999, KRW 623,039,252 for the business year of 200, KRW 919, KRW 919,380 for the business year of 202, KRW 503,278, KRW 298, KRW 209, KRW 200 for the changed business year of this case.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The instant transaction is a typical relay trading business. In other words, the price conditions for the transaction are matters to be determined according to the situation of the parties, each transaction was a transaction with the Plaintiff and an unrelated party, and the absence of customs clearance in Korea pursuant to the relevant laws and regulations, such as the Foreign Trade Act, constitutes the essence of the “China Trade” and thus, it cannot be said that there is any defect in the goods were not cleared in Korea, and it is contradictory to remedy only a part of the domestic customs clearance

(2) The instant disposition is an unlawful act of abusing the substance over form principle. In other words, to apply the substance over form principle, it should be subject to the unfair act reduction rule under individual laws under the no taxation without law. To fall under Article 52 of the Corporate Tax Act and Articles 87 through 90 of the Enforcement Decree of the Corporate Tax Act, there is a special relationship between the Plaintiff, the transaction partner, and the company related to the instant transaction, and there is no special relationship between the Plaintiff, overseas exporters, or overseas importers. Furthermore, the conditions for the management of sppers themselves are already premised on the effect of raising funds, and any transaction method is selected to realize the internal intent for raising funds in a fundamental manner. Furthermore, each of the instant transactions in this case must be treated according to the form. Furthermore, the Plaintiff has risks and benefits, and accordingly, the Plaintiff has to enter into an agreement with the Plaintiff as the Plaintiff, and thus, the Defendant cannot be said to have identical “economic substance” as restricted.

(3) As part of the purchase price of goods, interest income tax can not be imposed. In other words, the Corporate Tax Act does not include only the amount appropriated as the interest paid during the L/C method of a bank, but only the acquisition price is treated as part of the purchase price of the goods. In addition, Article 93 of the Corporate Tax Act provides only interest under Article 16(1) of the Income Tax Act as interest income, and Article 16-1(3) of the Income Tax Act provides that the amount additionally paid according to the settlement method of the purchase price shall not be regarded as interest income.

(4) The Plaintiff is merely paying the amount of a bill of exchange to the L/C issuing bank, and there is no room for a withholding duty. In other words, the Plaintiff is not an overseas exporter, but a new L/C issuing bank, and the Plaintiff’s payment, regardless of how the nature of the overseas exporter’s income is, cannot be subject to withholding duty.

(5) An error is apparent in the calculation of the Defendant’s interest income. In other words, in calculating the withholding tax amount on the domestic source interest income of an overseas exporter, the Defendant calculated the tax base by adding it to the Gros-Up interest rate. ① Interest should be the difference between the loan and the repayment, but the instant disposition is unlawful on the ground that the difference between the loan and the repayment amount is not the difference between the Sloper’s Usle and the payment amount in the instant transaction. ② Even if the interest pursuant to the instant transaction is considered as the “Sloper’s Usle’s interest interest” as alleged by the Defendant, there is no ground for calculating the tax base on the domestic source interest income by the Gros-Up method.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

The following facts may be acknowledged by integrating the whole purport of the pleadings in each statement of evidence Nos. 3 through 6, evidence Nos. 1, 2, 8, 9-1 through 7, and evidence Nos. 3-1, 2, 4-1, 2, 3, 5, 16, 7-1 through 4, and 1 through 8 are insufficient to reverse the above recognition, and there is no counter-proof otherwise.

(1) The Plaintiff’s transaction of this case was conducted by Korea at the end of 1997 with the aim of borrowing funds in order to resolve the problem of the shortage of funds due to the decline in foreign confidence in the Plaintiff’s affiliates at the time of receiving the IMF relief financing, and due to the decline in foreign confidence in the Plaintiff’s affiliates.

(2) The instant transaction began by proposing all the terms and conditions of the transaction, such as purchase, sales, discount of sales bonds, loans, interest, etc., on the part of an overseas exporter company overseas, which is a multi-national company, and the proposal is made in accordance with the needs of each other.

(3) The Plaintiff purchased from overseas exporters and sold them to overseas importers. However, prior to the involvement of the Plaintiff, the Plaintiff had already been determined in trading, trading, etc. from overseas exporters to overseas importers.

(4) A normal relay trade is a short-term period of payment (30 to 60 days), and it is against the fact that the payment period is a small-term (30 to 60 days) bearing a burden on the interest and 0.51% interest is generated on the basis of the sales amount. The instant transaction is a long-term (180 days) with a heavy burden on the interest, and the Plaintiff, who is a trader,

(5) In relation to the instant transaction, the Plaintiff and the Plaintiff’s employees in charge of the instant transaction were subject to investigation by the investigative agency, and were subject to criminal punishment on suspicion of violation of the Foreign Exchange Control Act and the Foreign Exchange Transactions Act on the ground that they illegally paid foreign currency for the import price using false loading documents even though there was no import transaction, or they illegally borrowed foreign currency for the export price using false loading documents, even if there was no import transaction, or that they borrowed foreign currency for the export price to the Republic of Korea using false loading documents (the same became final and conclusive as they

D. Determination

(1) Whether the instant transaction constitutes a normal relay trade, and is merely an act of borrowing funds with the external appearance of relay trade: Determination as to the Plaintiff’s allegation in paragraphs (1) through (4) above

As seen above, the following facts are acknowledged: ① the Plaintiff engaged in the instant transaction for the purpose of borrowing funds to cover the shortage of funds of the group affiliated with the Plaintiff to the IMF remedy finance company; ② the instant transaction began by proposing all the terms and conditions of the transaction in a multilateral exporter company; ③ the sale and purchase of the instant transaction from an overseas exporter before the Plaintiff intervene in the instant transaction; ④ the instant transaction is for a long period of 180 days or longer, and there is a lot of interest burden; ④ the Plaintiff’s business operator is deemed to have suffered losses equivalent to the amount of interest at each time of transaction; ⑤ the Plaintiff and the employees of the Plaintiff in charge of the instant transaction made the statement at the investigative agency of the above contents, and it is difficult to view that the Plaintiff and the Plaintiff did not actually have paid foreign currency as the import price, or that there was no actual import transaction and export transaction under the pretext of foreign currency transactions, or that there was criminal punishment against the Plaintiff in violation of the Foreign Exchange Transactions Act and the Foreign Exchange Transactions Act in the form of an overseas exporter’s purchase price in the form of an overseas trading.

Therefore, we cannot accept all the Plaintiff’s assertion of paragraphs (1) through (4) which is premised on the fact that the instant transaction is a normal relay trade.

(2) Whether any error exists in calculating interest income: Determination as to the Plaintiff’s assertion

(A) As seen earlier, the transaction of this case is merely an act of borrowing funds with the appearance of relay trade. The plaintiff borrowed funds equivalent to the above sales amount in the form of selling funds through the transaction of this case to an overseas importer and used them for the period of 's maintenance', and then repaid interest on the above borrowed money and borrowed money in the form of paying interest on the purchase price to an overseas exporter additionally. Thus, the difference between the "loan equivalent to the above sales price received by the plaintiff from an overseas importer" and "the above purchase price and the pes Usle interest paid by the plaintiff to an overseas exporter" is the interest for the use of the above borrowed money.

However, as seen above, the above sale price paid by the Plaintiff from a foreign importer is less than the above purchase price paid by the Plaintiff to a foreign exporter. Since the interest (i.e., the difference between the "loan equivalent to the above sale price" and the "the total amount of the above purchase price and the short-term loan interest" is larger than the "sperperper" interest, it cannot be deemed unlawful even if the Defendant deemed the interest, the use price of the above loan, as the price for the loan, as the interest for the loan, as the price for the loan, as the price for the loan, as the interest for the loan, as the price for the loan, as the interest for the loan, as the price for the loan, is larger than

Therefore, the plaintiff's assertion as above 2. A. (5) cannot be accepted.

(B) In calculating the amount of tax to be withheld by the Plaintiff on the domestic source interest income of an overseas exporter, the tax base is calculated by Gros-Up as seen earlier. Whether such calculation method is legitimate depends on whether the Plaintiff paid interest for the instant transaction to an overseas exporter, which is the interest for the instant transaction, and deducted and paid the withholding amount. In other words, if the Plaintiff paid to an overseas exporter with the withholding amount after deducting the withholding amount, it is necessary to add the amount deducted from the domestic source interest for the calculation of the domestic source interest income of an overseas exporter. Thus, Gros-Up method is required. However, if not, the “speper” which the Plaintiff paid to an overseas exporter would be the tax base for the domestic source interest income of an overseas exporter.

However, in this case, the evidence presented as above is insufficient to recognize that the plaintiff paid the interest for the transaction of this case to the overseas exporters after deducting the withholding amount. There is no evidence to acknowledge otherwise.

Rather, as seen earlier, the instant transaction is merely an act of borrowing funds with the appearance of relay trade, and such transaction is intended to avoid interest income tax due to the act of borrowing funds. Therefore, it is difficult to deem that the Plaintiff paid the interest accrued from the instant transaction to overseas exporters after deducting the withholding amount.

[Common Rule 98-0.2 of the Corporate Tax Act provides that "if domestic source income under Article 93 of the Corporate Tax Act is paid to a foreign corporation with no domestic place of business, the tax base amount under Article 91 (2) of the Corporate Tax Act shall be calculated by the Gros-Up method when the contract terms provide that "if the domestic source income is paid to a foreign corporation with no domestic place of business, the tax base amount under Article 93 of the Corporate Tax Act shall be calculated by the method of Gros-Up," under the title "the tax base amount shall be calculated by the method of the domestic tax

Therefore, the plaintiff's assertion as above 2. A. (5) is with merit.

(3) Legal amount of tax

If the corporate tax is calculated for interest income that the Plaintiff has to pay to overseas exporters as the tax base for the interest income from domestic source of overseas exporters, the amount of interest income that the Plaintiff has to pay shall be KRW 241,862,99 for the business year of 199, KRW 557,117,150 for the business year of 200, KRW 827,189,440 for the business year of 2001, KRW 441,714,370 for the business year of 202, KRW 332,703,03,090 for the business year of 204 and KRW 90,875,270 for the business year of 204, KRW 491,462,250 for the business year of 200. Therefore, the portion exceeding the corporate tax amount of the disposition of this case is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified within the scope of the above recognition, and the remainder is justified, and it is dismissed as it is so decided as per Disposition.

[Attachment]

Judges Kim Yong-sung (Presiding Justice)