Whether a foreign-invested enterprise that is excluded from the object of taxation of registration tax under Article 101 (1) 3 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 12028 of Dec. 31, 1986) is limited to an enterprise registered under Article 12 of the Foreign Capital Inducement Act (negative)

A foreign-capital invested company that is excluded from the object of taxation of registration tax under Article 101 (1) 3 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 12028 of Dec. 31, 1986) shall not be deemed to be limited to a company registered under Article 12 of the Foreign Capital Inducement Act, but shall be deemed to include a foreign-capital invested company authorized by the Minister of Finance and Economy under Article 7 of the same Act and a participating company.

Articles 7 and 12 of the Foreign Capital Inducement Act, Article 137 of the Local Tax Act, Article 138 of the former Local Tax Act, Article 101 of the Enforcement Decree of the same Act

Hysung Card Corporation

The head of Jung-gu Seoul Metropolitan Government

1. The Defendant’s disposition of imposition of KRW 46,848,00 for the registration against the Plaintiff on June 15, 1987 is revoked. The imposition of KRW 9,369,60 for the defense tax is revoked.

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

The same shall apply to the order.

1. On the other hand, Article 13 of the former Enforcement Decree of the Local Tax Act provides that the foreign-capital invested company shall have no dispute over the establishment of Gap's capital increase (including Gap's 1, Eul's 2, Eul's 4, Gap's 5-1, Eul's 2, Eul's 8-1, and two different arguments, the plaintiff shall have no tax rate of 60,000,000 won which is 60,000 won and no more than 1,60,000 won which are 1,000,000 won and no more than 3,000,000 won which are 1,000,000 won and no more than 3,000 won which are registered under Article 16-1,00 won of the former Enforcement Decree of the Local Tax Act, and the plaintiff shall have no tax rate of 1,60,000 won which is established under Article 16-17,00 won of the Local Tax Act.

2. According to the purport of the above provision of each of the above statutes, the defendant asserts that the above taxation disposition of this case is legitimate because it is not yet applicable to the company that is not subject to the application of heavy tax rate before being registered with the Ministry of Finance and Economy pursuant to Article 12 of the Foreign Capital Inducement Act. Accordingly, the "foreign-invested enterprise" under Article 101 (1) 3 of the former Enforcement Decree of the Local Tax Act is not limited to the company registered pursuant to Article 12 of the Foreign Capital Inducement Act, but it shall be deemed that a foreign investment authorized by the Minister of Finance and Economy pursuant to Article 7 of the same Act includes a foreign investment company established and participating in the business. Thus, the above taxation disposition of this case is unlawful and even if it is not so, the Mayor of Seoul Special Metropolitan City has established non-taxation practices by making a decision on the same purport as the plaintiff's assertion. Thus, the defendant's taxation disposition of this case is unlawful.

Therefore, under the purport that a foreign-capital invested company will develop a large city in a balanced manner and prevent population concentration, it is prepared to restrict the big phenomenon of the company by newly establishing or moving into a large city, or by imposing registration tax in a new factory within a large city. However, it is necessary to attract foreign capital in Korea due to the economic situation and there is considerable incentive to do so, so, it is necessary to do so. Accordingly, according to the provisions of Articles 14 through 16 of the Foreign Capital Inducement Act, a foreign-capital invested company should be allowed to exclude foreign-capital invested companies from the registration tax in accordance with the provisions of Article 101 (1) 3 of the former Enforcement Decree of the Local Tax Act. This is also interpreted as an exception to the provisions of Article 106 of the same Act, which provide that the foreign-capital invested company shall be subject to the exclusion of the registration tax for each foreign-capital invested company from the previous provisions of Article 101 (1) 2 of the same Act. This is also interpreted as having the provisions of Article 101 (2) of the former Enforcement Decree of the Local Tax Act.

3. Thus, as seen earlier, the Plaintiff is satisfied by paying the registration tax and its defense tax according to the tax rate stipulated in Article 137(1)1 of the former Local Tax Act, not the heavy tax rate under Article 138(1)1 of the same Act with regard to the registration of establishment and increase of capital. Thus, the instant tax disposition that the Defendant additionally notified the Plaintiff by applying the above heavy tax rate cannot avoid revocation because it was unlawful as to the remainder of the Plaintiff’s remaining assertion without examining it.

Therefore, the plaintiff's claim of this case seeking the revocation of the taxation disposition of this case is justified, and the costs of lawsuit are assessed against the losing party. It is so decided as per Disposition.

Judges Kim Young-jin (Presiding Judge)