Whether input expenses related to the golf course creation works are subject to input tax deduction of value-added tax.

Since the cost invested for the construction of golf courses is the cost required for the alteration of the form and quality of the land or the actual increase of the value of the land, the initial disposition that did not deduct input tax amounts is legitimate.

Article 12 (Exemption from Value-Added Tax)

Article 17 (Payable Tax Amount)

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The decision of the defendant on September 22, 2006 against the plaintiff on September 22, 2006 shall be revoked.

1. Details of the disposition;

A. The Plaintiff started to build a golf course from around 2003, as a business operator operating a golf course in the ○○○○○○○○○○○○○○○○, the Plaintiff reported and paid the value-added tax for the first period of 2003, and the Plaintiff did not deduct the input tax amount of KRW 21,465,909 (hereinafter referred to as “instant provision”) for the expenses incurred in relation to the construction of the land of a golf course from the output tax amount (hereinafter referred to as the “instant provision”) under the latter part of Article 17(2)4 of the Value-Added Tax Act (hereinafter referred to as the “Act”), and Article 60(6) of the Enforcement Decree of the Act (hereinafter referred to as the “Enforcement Decree”).

B. On July 24, 2006, the Plaintiff filed a claim for correction on the premise that the input tax amount can be deducted, but the Defendant rejected the claim on September 22, 2006.

C. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the National Tax Tribunal on December 21, 2006, but was dismissed on February 8, 2007.

[Reasons for Recognition] Unsatisfy, Gap evidence 1, Eul evidence 1 to 4

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) Claim concerning the interpretation of the latter part of the provision of this case and the Enforcement Decree provision

The golf club business is a taxable business and the instant input tax amount constitutes the input tax amount to run a taxable business, but the latter part of the instant provision, which is the basis of the instant disposition, goes against the basic principle of our value-added tax, under the former phase tax credit Act. The latter part of the instant provision, which is the basis of the instant disposition, is not simply a tax-related input tax amount deduction, but a tax-related input tax amount for the tax-free business, should be interpreted as a Daejeon tax item. The instant provision of the Enforcement Decree, which so interpreted, is invalid against the principle

(2) The assertion that the latter part of the provision of this case and the enforcement decree of this case are unlawful against the principle of clarity

The latter part of the provision of this case provides that input tax amount shall not be deducted for the land-related input tax amount as prescribed by the Presidential Decree. The provision of this case provides that input tax amount related to the capital expenditure for the creation, etc. of land: ① alteration of the form and quality of land, ② input tax amount related to the creation, etc. of a factory site and a housing site; ② input tax amount related to the acquisition and removal cost of the removed building in the case of the removal of the building after acquiring the land on which the building is located; ③ input tax amount related to the expenses for the acquisition and removal of the removed building; ③ increased the value of the land in reality, and ③ input tax amount related to the expenses that constitute the acquisition cost of the land on the cost of acquiring the land. However, in the case of the civil works that alter the form and quality of the land, there is no way to specify the value of the land by distinguishing only the capital expenditure in the case of the land, and ③ there is no specific provision on the expenses that actually increases the value of the land in the case of the land.

(3) The assertion that the latter part of the provision of this case violates the Constitution

The input tax amount of a taxable entrepreneur shall be deducted in accordance with the purport of Article 17(1) of the Value-Added Tax Act. Nevertheless, the latter part of Article 17(1) of the Value-Added Tax Act, which practically deducts input tax amount related to land related to taxable businesses, is unconstitutional, since it is a taxation on the acquisition of assets, and it is a double taxation exceeding the limit of the value-added tax, and it goes beyond the limit of the legislative discretion to the extent that it is not acceptable under the fundamental principles of value-added tax, thereby infringing on the rights of equality

B. Relevant statutes

Article 12 (Exemption from Value-Added Tax)

Article 17 (Payable Tax Amount)

Article 60 (Scope of Purchasing Tax Amount)

C. Determination

(1) Determination on the assertion regarding the interpretation of the latter part of the provision of this case

(A) The provision of this case and the Enforcement Decree provision

The instant provision provides that the input tax amount related to the tax-free business and the land-related input tax amount as prescribed by the Presidential Decree are the input tax amount related to the capital expenditure for the creation, etc. of the land. The instant provision explicitly states that the input tax amount related to the capital expenditure for the creation, etc. of the land is the object of non-deductible regardless of whether it is related to the tax-free business or related to the taxable business.

(B) Opinion conflict and legislative resolution relating to non-deduction of the input tax amount related to land.

On the other hand, Article 17(2)4 of the former Value-Added Tax Act (amended by Act No. 4664 of Dec. 31, 1993) only stipulates that the input tax amount related to the tax-free business should be deducted, but Article 60(6) of the former Enforcement Decree of the former Act (amended by Act No. 4664 of Dec. 31, 199 provides that the input tax amount related to the tax-free business shall be included in the capital expenditure for the creation of the land, etc. although there are no delegation provisions on the tax-free business, the above provision on the tax-free business should be amended to ensure that the tax-related tax-related tax deduction should be established. On the other hand, the Supreme Court en banc Decision 99Da194195 Decided Dec. 2, 193, 199 that the provisions on the tax-free business related to the tax-free business related to the tax-free business were amended to ensure that all the input tax-related tax-related tax deductions related to the tax-free business are excluded.

(C) Therefore, the Plaintiff’s assertion on the premise that the latter part of the instant provision should be construed to deduct only the input tax amount related to the tax-free business from the input tax amount.

(2) As to the assertion that the latter part of the provision of this case and the enforcement decree of this case are unlawful against the principle of clarity

On the other hand, whether it is contrary to the principle of clarity of taxation requirements or not shall be determined by comprehensively examining what act from the taxpayer's standpoint can be predicted as being subject to taxation because it constitutes the pertinent phrase, which is a taxation requirement, whether it accords the possibility of arbitrary and discriminatory application of the law from the viewpoint of the administrative agency, and whether it can expect the choice of more conclusive words technically more technically in legislation.

Article 31(2) of the Enforcement Decree of the Corporate Tax Act provides that an input tax amount related to capital expenditures for the creation, etc. of land shall not be deducted as an input tax amount. In addition, Article 31(2) of the Enforcement Decree of the Corporate Tax Act provides that the term “capital expenditures for the creation, etc. of land” shall be construed as “capital expenditures for the creation, etc. of land” and “capital expenditures for the creation, etc. of land” under the corporate accounting standards and the Corporate Tax Act. However, Article 31(2) of the Enforcement Decree of the Corporate Tax Act provides that the term “capital expenditures” refer to repairs for the extension of the lifespan of the depreciable assets owned by a corporation or for the enhancement of the value of the relevant assets, and provides that the term “capital expenditures” refers to repairs for the alteration of the original purpose (No. 1), the installation of elevators or cooling equipment (No. 2), and the installation, expansion, etc. (No. 3) of escape facilities, etc. shall be construed as the scope of the revenue and expenditure of the relevant fixed assets in the future business accounting standards.

In full view of the above relevant regulations and accounting practices, the scope of the input tax amount to be deducted from the input tax amount under the latter part of the provision of this case and the provisions of the Enforcement Decree of the Value-Added Tax Act can be reasonably predicted, and there is no possibility of arbitrary application by the tax authorities. Of course, there is a case where it is difficult to strictly distinguish capital expenditures and beneficial expenditures depending on the case, or there is a case where it is difficult to secure predictability through the accumulation of practical practices and precedents. Furthermore, even if there is a case where capital expenditures for the creation, etc. of land in the actual transaction, and there is a case where a transaction is conducted by combining the portion of the beneficial expenditures without specifying the portion of the capital expenditures, and as a result, there is a difficulty in specifying the expenses corresponding to the capital expenditures, such transaction practices cannot be deemed to be a general and total area. Moreover, it is difficult to conclude that the specific cost determination difficulty exists in the tax practice, and it is a matter to be resolved through the creation of trade practices meeting the corporate accounting principles, specialization of tax administration, and reasonable legal application efforts, etc.

Therefore, the latter part of the provision of this case and the enforcement decree of this case cannot be deemed to contravene the principle of clarity of taxation requirements.

(3) Determination as to the assertion that the latter part of the provision of this case and the enforcement decree of this case are invalid because they violate equality rights and property rights guaranteed by the Constitution as double taxation

(A) Article 17(1) of the Value-Added Tax Act provides that an entrepreneur’s input tax amount shall, in principle, be deducted as an input tax amount for the supply of goods or services related to his/her own business, under the premise that the output tax amount accrues with respect to the entrepreneur’s business. In the event that the entrepreneur’s supply of goods or services related to his/her own business is exempted from the output tax due to the said exemption, the amount of tax for

(B) Capital expenditures for the creation, etc. of land should be included in the cost for acquisition of land under tax accounting. The value-added tax is also exempted in cases where a business operator supplies tax-free goods as well as in cases where he supplies them for a taxable business while using them for a taxable business. Therefore, as long as the output tax amount for capital expenditures for the creation, etc. of land is exempted, the relevant input tax amount cannot be deducted as the input tax amount even if the capital expenditures for the creation, etc. of land are for a taxable business.

(C) Whether the supply of land is subject to value-added tax exemption, and whether the relevant input tax amount should be deducted from the output tax amount is, in principle, belong to the legislative discretion as a matter of tax policy. Unlike the zero-rate tax system that deducts the input tax amount, the tax exemption system under Article 12 of the Act provides for the exemption of the input tax amount as a result of the exemption of the output tax amount, and the failure to deduct the relevant input tax amount, regardless of whether the business is a tax-free business or a taxable business for the creation, etc. of land, is contrary to the basic principle of the tax exemption system.

(D) Capital expenditures for the creation, etc. of land were included in the cost for acquisition of the relevant land, and can be recovered by including the gains from transfer when the relevant land is transferred (see, e.g., Article 97(1)2 of the Income Tax Act and Article 163(3) of the Enforcement Decree of the same Act), and it is recovered by including necessary expenses or deductible expenses in calculating the business income (Article 5(1)2 of the Enforcement Decree of the Income Tax Act and Article 19 subparag. 2 of the Enforcement Decree

(E) Therefore, it cannot be deemed that the latter part of the instant provision, which deducts the input tax amount related to land, is a double taxation exceeding the limit of the consumption-type value-added tax, and thus, violates the constitutional right to equality and property rights guaranteed by the Constitution beyond the limit of the legislative discretion acceptable under the fundamental principles of value-added

(4) Sub-determination

Therefore, the defendant's disposition of this case based on the premise that the input tax amount for the expenses invested by the plaintiff for the creation of golf course constitutes the input tax amount related to capital expenditures for the alteration of the form and quality of the land or the increase of the value of the land, based on the latter part of the provisions of this case and the provisions of the Enforcement Decree of this case, is not deducted.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and the judgment of the court of first instance sharing the conclusion is legitimate, and the plaintiff's appeal is dismissed as it is without merit, and it is so decided as per Disposition.

[Cheongju District Court Decision 2007Guhap8444, 2008)]

1. The plaintiff's claim is dismissed.

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

On September 22, 2006, the Defendant revoked the decision to dismiss the claim for rectification of value-added tax filed against the Plaintiff.

1. Details of the disposition;

A. The Plaintiff, a business operator operating a golf course at the ○○○○○○○○○○○○○○○○○○, starting to build a golf course from around 2003. The Plaintiff reported and paid the value-added tax for one-year period of 2003, and the Plaintiff did not deduct the input tax amount of KRW 21,465,90 (hereinafter “the instant input tax amount”) for the expenses incurred in relation to the creation of a golf course as stipulated in the latter part of Article 17(2)4 of the Value-Added Tax Act (hereinafter “the instant provisions”) and Article 60(6) of the Enforcement Decree of the Act (hereinafter “Enforcement Decree”).

B. On July 24, 2006, the Plaintiff filed a claim for correction on the premise that the input tax amount can be deducted, but the Defendant rejected the claim on September 22, 2006.

C. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the National Tax Tribunal on December 21, 2006, but was dismissed on February 8, 2007.

[Ground of recognition] Facts without any dispute, Gap evidence 1, Eul evidence 1 to 4

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) argument regarding the interpretation of legal provisions

Basically, the golf course business is a taxable business, and the instant input tax amount constitutes the input tax amount to run a taxable business, and thus, is contrary to the basic principles of our value-added tax law under the former phase tax credit. The latter part of the instant provision, which is the basis of the instant disposition, does not simply deduct the input tax amount for the tax-free business, but rather make the input tax amount as a Daejeon tax item. The instant provision that is so interpreted is null and void against the principle of no taxation without law, such as violating the principle of clarity

(2) The chief executive officer of the instant provision and the Enforcement Decree’s constitutional violation

The latter part of the provision of this case, which deducts input tax from land-related input tax, is in fact an taxation following the acquisition of assets, which goes beyond the limit as a consumption-type value-added tax, as well as an unconstitutional provision that infringes on the right of equality and property rights guaranteed by the Constitution as a prior provision beyond the limit permitted under the basic principles of value-added tax. Therefore, the disposition

(b) Related statutes;

The relevant Acts and subordinate statutes shall be as shown in the attached Form.

C. Determination

(1) Determination as to the interpretation of the legal provision (the provision of this case and the enforcement decree of this case)

(A) Current VAT taxation method

The current method of taxation of value added tax is, in principle, adopted as a basic structure, the pre-stage tax credit, which provides that the sum of self-production added and purchased added value shall be the value of supply and deducts the input tax amount that is paid for the purchase added value from the output tax amount that shall be collected. Article 17(1) of the Act provides that the input tax amount shall be deducted, and the tax amount on the supply of goods or services that have been used or are to be used for the compensation business for damages or the tax amount on the import of goods that have been used or are to be used for its own business. However, the input tax amount shall not be deducted, but the whole input tax amount shall be denied.

(B) Type of non-deduction of input tax amount

Article 17(2) of the Act provides that input tax amounts under the former part of Article 17(2) shall not be deducted based on the basic principles of value-added tax, such as the instant provision (tax-free input tax). Second, the instant provision provides that input tax amounts related to the tax-free business and the land-related input tax amounts under the Presidential Decree shall be deducted based on the tax policy or taxation procedure, such as the input tax amounts or entertainment cost-related input tax amounts (Article 17(2)1 and 1-2 of the Act). The instant provision provides that input tax amounts related to the former part and latter part of the Act provides that input tax amounts related to the tax-free business and the land-related input tax amounts under the Presidential Decree shall be deducted based on the basic principles of the former part of the Act on the Tax Exemption and Exemption and the grounds for not deducting input tax amounts related to the tax-free business are stipulated in each of the following subparagraphs, and that input tax amounts related to the supply of goods and services shall be deducted based on the basic principles of the latter part of the Act on the supply of the goods and services, regardless of the final provisions of the Value-Adde Tax Act.

(C) Interpretation of the latter part of the instant provision and the process of legislative resolution

However, Article 17(2)4 of the former Act on December 31, 1993 (hereinafter “former Act”) provides that the input tax amount related to the land under the latter part of Article 17(2)4 of the former Act on December 31, 1993 shall not be deducted from the input tax amount, and Article 60(6) of the former Enforcement Decree (hereinafter “former Enforcement Decree”) shall be newly established on December 31, 1991 that the input tax amount related to the capital expenditure for the creation, etc. of the land shall be included in the input tax amount under Article 17(2)4 of the former Enforcement Decree without any delegation provision. Since the former Act on December 31, 1991, the Supreme Court has interpreted whether only the input tax amount related to the land under the latter part of Article 17(2)4 of the Act on Tax Exemption and the former Enforcement Decree on Tax Exemption and the former Act on Tax Exemption and the former Enforcement Decree on Tax Reduction and Exemption and Other Related Provisions on Tax Reduction and Other Related Provisions on Tax Reduction and Other Related Provisions on Land.

(2) Determination as to whether the provision of this case and the enforcement decree of this case are unconstitutional and invalid

In the case of taxable businesses, the Plaintiff asserts that the provision of this case violates the Constitution or the Enforcement Decree of this case is null and void against the principle of no taxation without law, on the premise that the latter part of the provision of this case and the Enforcement Decree of this case are contrary to the basic principle of no taxation without deducting the input tax amount

However, the following circumstances, namely, the value-added tax on the supply of land for golf clubs, basically goes beyond the bounds of the Enforcement Decree of the Income Tax Act, is not for the supply of the land itself, but for the supply of services to develop the land as golf clubs. However, it is difficult to view the supply of land as the output tax amount for golf clubs after the formation of land. ② It is merely an interpretation that the input tax amount should be deducted from the output tax amount under the former Act and the Enforcement Decree of the Income Tax Act, which is the cost of operating a golf club business, even if it comes to the capital expenditure for the formation of land. Thus, it is difficult to view that the provision on the input tax amount for the acquisition of the land as tax exemption under the latter part of the Enforcement Decree of the Income Tax Act, which goes against the principle of no taxation without law, to exclude the input tax amount for the development of the relevant land from the input tax amount for the purpose of tax exemption under the latter part of the Act, and thus, it is difficult to apply the aforementioned provision to the input tax amount for the purpose of tax exemption to be deducted from the capital revenue amount.

(3) Sub-determination

Therefore, in the instant case, the input tax amount for the expenses that the Plaintiff invested for the formation of a golf course is the cost required to increase the actual form and quality of the land or the value of the land. As such, the Defendant’s disposition based on the premise that the input tax amount is not deducted is lawful, since it constitutes the input tax amount related to capital expenditure related to the creation, etc. of land under the latter part of the instant provision

3. Conclusion

Therefore, the plaintiff's claim of this case is rejected due to the lack of reason, and it is so decided as per Disposition.