Cho Jae-201-Seoul Government-3200 (25 June 2012)

If research and development services are entrusted to an enterprise holding a department exclusively in charge of research and development, the expenses incurred in the entrustment, regardless of whether it has a department exclusively in charge of the

If research and development services are entrusted to an enterprise holding a department exclusively in charge of research and development, expenses incurred in the entrustment, regardless of whether the entrusted enterprise has a department exclusively in charge of re-entrusted research and development, shall be eligible for tax credit

Tax credit for research and human resources development expenses under Article 10 of the Restriction of Special Taxation Act

2012Guhap31885 Action Demanding revocation of the imposition of corporate tax

AA Life Insurance Corporation

개가지

May 9, 2013

August 22, 2013

Cheong-gu Office

1. On June 7, 2011, the Defendant’s imposition disposition against the Plaintiff is revoked on April 1, 2005 to March 31, 2006 by the OOOOO of corporate tax belonging to the business year.

2. The costs of the lawsuit are assessed against the defendant.

Cheongwon of the Gu

1. Details of the instant disposition;

A. Basic facts

(1) The plaintiff, as a corporation operating life insurance business, entered into a contract between April 1, 2001 and March 31, 2002 to entrust the establishment, etc. of a computer system with the trustee company BB, CCC, AA information and communications company, Korea DDR (hereinafter referred to as the "trustee company of this case") from April 1, 2005 to March 31, 2006, and the defendant paid the total amount of OOOO (hereinafter referred to as the "the research and development expenses of this case") to the entrusted company of this case for the purpose of the entrusted research and development expenses, and the plaintiff made a request for correction on June 4, 2009 (hereinafter referred to as "2), based on the former Restriction of Special Taxation Act (amended by Act No. 827, Dec. 31, 2007; hereinafter referred to as the "former Restriction of Special Taxation Act") and Article 106 (2) of the former Tax Credit Ordinance No. 30. 10. 27.

(1) On June 7, 2011, the defendant issued 300 won for the plaintiff 2, 201 authoritative interpretation of the Ministry of Strategy and Finance (re-determination - 844, September 25, 2009) on the ground that the OO members out of the expenditure amount of the research and development expenses of this case are expenses paid by the entrusted company to a third party and thus they are not subject to the tax credit under Article 10 of the former Restriction of Special Taxation Act. The defendant issued 30 OO00 won for the business year from April 1, 2005 to March 31, 2006 (the first notice of tax payment) (hereinafter referred to as "OO00.1) (2) The plaintiff filed an appeal on August 19, 201, and the tax Tribunal revoked the decision on June 25, 201 for the first 30 O20O0 or 200O00 won for the business year other than that of this case.

(a) relevant laws and regulations - as shown in the Appendix;

B. Key issues

The main text of Article 10(1) of the former Restriction of Special Taxation Act, Article 9(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 20620, Feb. 22, 2008; hereinafter the same) and [Attachment 6] provide that the expenses incurred by entrusting the research institute or department in charge of the development of technology, etc. among the expenses for research and human resources development shall be set up as counter-claiming the tax credit. Therefore, the key issue of this case is whether it is legitimate to exclude the service cost corresponding to the portion re-entrusted to the research institute or department in the course of the instant research and development expenses paid by the Plaintiff to the trustee company in the course of performing the research and development services by the trustee company of this case (hereinafter referred to as the "contributing research and development costs") from the amount of the instant research and development expenses paid by the Plaintiff to the trustee company of this

A. Legislative intent of the tax credit provision

The provisions on tax credit for research and development expenses have existed under the former Tax Reduction and Exemption Control Act under the name of tax credit for past technology and research and development expenses, and on December 29, 2000, when the former Special Tax Treatment Control Act was amended, the corporation subject to tax credit is expanded to most existing domestic corporations, and its name is changed to the tax credit for research and human resources development expenses, and continues to exist until now.

The legislative intent of the tax credit provision is to promote technology and human resources development by granting more tax credits to taxpayers (the Plaintiff in this case) for technology and human resources development investment (see, e.g., Supreme Court Decision 2000Du3115, Jan. 22, 2002).

(b) Expenses subject to tax credit for research and development expenses;

As seen earlier, the object of the tax credit under Article 10(1) of the former Restriction of Special Taxation Act is only the research and development expenses that are disbursed in the form of commissioning technology development services, etc. to research institutes or dedicated departments (hereinafter referred to as “dedicated departments”) of domestic and foreign enterprises. Meanwhile, Article 9(5) of the current Restriction of Special Taxation Act provides that the meaning of the research and development expenses is "activities to achieve scientific or technical development and to develop a new service and service delivery system." Ultimately, the object of the tax credit of this case is (i) the expenses that are disbursed in the form of entrusting technology development services, etc. to a dedicated department of domestic and foreign enterprises (or activities for developing a new service and service delivery system). Accordingly, whether the issue is subject to the tax credit of this case also is whether the two requirements of the above (i) and (ii) are satisfied."

(1) The method of being entrusted with technology development services to an enterprise with a dedicated department in the former Enforcement Decree of the Restriction of Special Taxation Act is called “entrustment of the legal doctrine of delegation below Article 680 of the Civil Act.” The trustee has the duty of care (Article 681 of the Civil Act) according to the terms of delegation. As the trustee has the duty of care and good faith (Article 681 of the Civil Act), it is obligated to perform his best to give the truster the outcome of research and development so that it can achieve the objectives of the delegate of technology development. If the trustee voluntarily determines the method of handling his/her duties in order to achieve the objectives of technology development, it is not an area of interest of the delegating who is achieved through a specific and extreme method. From the standpoint of the truster, if it is entrusted with technology development services to an enterprise holding the dedicated department, i.e., a trustee equipped with quality control capacity, the truster’s duty of care and supervision, and thus, it should be determined that it conforms with the purpose of the truster’s final tax credit of research and development funds.

D. Purport of the exclusive department system

(1) Article 7 (1) of the former Enforcement Rule of the Restriction of Special Taxation Act (amended by Ordinance of the Ministry of Finance and Economy No. 579 of Oct. 29, 2007; hereinafter the same) provides that a dedicated department shall be a department exclusively in charge of research and development reported to the Minister of Science and Technology pursuant to Article 7 of the former Enforcement Rule of the Technology Development Promotion Act, and relevant provisions such as the Enforcement Rule of the former Technology Development Promotion Act provide that the dedicated department shall be equipped with human requirements, requirements for facilities, securing time exclusively in charge of research, and reporting to the relevant ministries. In addition, the former Enforcement Rule of the Restriction of Special Taxation Act provides that the dedicated department shall be performed in the form of "entrustment" when it entrusts technology development services to an enterprise holding the dedicated department. Ultimately, the purport of the former Enforcement Ordinance of the Restriction of Special Taxation provides that an enterprise with high-level technology in charge of research and development should manage the final products of research and development and enhance the quality of the outcomes of research and development, which is the result of a new research and development project.

If it is determined that the research and development outcome of the instant consignment company was not fully or partially achieved the purpose of the instant consignment contract from the Plaintiff, the truster, would have taken legal measures, such as cancellation, termination, or reduction of the agreed price, etc.

E. The illegality of the instant disposition

1) The key research and development costs are the expenses disbursed under the instant consignment contract concluded between the Plaintiff and the instant consignment company holding a research institute or a dedicated department. Accordingly, there is no doubt that the requirements of this subparagraph are met that the technology development services should be entrusted to the dedicated department of a domestic company. Next, since the content of the instant consignment contract is an activity to achieve technical development and the cost of the relevant services is required for the relevant services, it also satisfies the requirements of this subparagraph (ii), i.e., the activities to achieve technical development. In this regard, the Defendant has no objection.

2) Ultimately, in cases where service costs are paid to a commissioning company with a dedicated department in the interpretation of the law to achieve technical progress, the relevant costs are naturally subject to the tax credit for research and development expenses. Therefore, the Supreme Court has ruled that the tax credit for technology and human resources development expenses under the former Regulation of Tax Reduction and Exemption Act should be naturally deducted when the requirements are met (see Supreme Court Decision 2000Du3115, Jan. 22, 2002). The Supreme Court rejected the claim by the tax authority that the technology and human resources development expenses credit provision does not exclude the cases where research and human resources development expenses are not spent for the immediately preceding four years from the application (Supreme Court Decision 2009Du22454, Apr. 29, 2010). In short, the instant disposition denying the tax credit for research and development expenses due to any other requirement without the law itself violates the principle of no taxation without the law, and it is against the purpose of legislation, giving more benefits to the Plaintiff who is a taxpayer.

F. Sub-decision

If research and development expenses are paid to an enterprise holding a dedicated department as above, it is not necessary to determine whether to grant a tax credit, depending on whether there is a sub-entrustment to an enterprise that does not hold a dedicated department thereafter. The issue of Defendant’s taxation is not consistent with the legislative intent of the tax credit and the system of the dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated dedicated. It is difficult to easily understand that the Plaintiff

As to the interpretation of Article 7(1) of the former Enforcement Rule of the Regulation on Tax Reduction and Exemption (amended by Ordinance of the Prime Minister No. 1970 of Apr. 13, 1994 and Article 6(1) of the former Enforcement Rule of the Regulation on Tax Reduction and Exemption (amended by Ordinance of the Prime Minister No. 499 of Apr. 1, 1995) which applied to the instant case, unlike Article 7(1) of the former Enforcement Rule of the Restriction of Special Taxation Act, it is sufficient to conclude that the previous Supreme Court of Korea intends to constitute a department for research and development among the departments for exclusive use referred to in this case by satisfying the requirements of Article 3-3(1) of the former Enforcement Rule of the Technology Development Promotion Act or Article 5(1) of the current Rule, which does not require the Minister of Science and Technology to report to the Minister of Science and Technology, and it is reasonable to conclude that the tax authorities should not have any other reasonable grounds to interpret the requirements of each of the above Article 19(1) of the former Enforcement Rule.

4. Conclusion

The Defendant cannot be viewed as subject to tax credit under Article 10 of the former Restriction of Special Taxation Act, the issue of research and development costs corresponding to the expenses paid by the instant trustee company, holding a dedicated department, by sub-entrustment of some services to an enterprise that does not have a dedicated department. However, the instant trustee company has taken the disposition of this case, maintaining the position that the amount corresponding to the expenses paid by the instant trustee company when re-contracts some services to an enterprise

Of course, such a interpretation is illegal because it denies the tax credit for research and development expenses by adding all other requirements that do not exist in the law concerning the issue research and development expenses as seen earlier, and it is necessary to reduce or interpret the tax credit by adding any requirements that do not exist in the law.

Under the principle of no taxation without law, the interpretation of the tax law must be strict, and it is not allowed to reduce or interpret the provision that benefits the taxpayer unless there is a reasonable ground, and even if such provision appears to be due to the simple legislative cost, it is not possible to impose the burden on the taxpayer.

As above, all of the dispositions of this case are unlawful, so cancellation shall be made in the state.