Appropriateness of a disposition that excludes capital gains tax reduction or exemption for self-Cultivating farmland

Even if it was designated as a large-scale development project area under the proviso of Article 66 (4) 1 of the Enforcement Decree of the Restriction of Special Taxation Act, the transfer income tax shall not be reduced or exempted because it was already incorporated into a residential area and transferred after three years have elapsed from the date of incorporation into a residential area.

Article 69 of the Restriction of Special Taxation Act

Article 66 of the Enforcement Decree of the Restriction of Special Taxation Act

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

Cheong-gu Office

The defendant's refusal to correct the transfer income tax against the plaintiff on January 12, 2005 shall be revoked.

1. Details of the disposition;

A. On April 19, 2004, the Plaintiff transferred each land listed in the separate sheet (hereinafter referred to as “each land of this case”) to ○○○ Co., Ltd., and paid capital gains tax of KRW 18,812,460 to the Defendant on June 28 of the same year.

B. On December 8, 2004, the Plaintiff filed an application with the Defendant for refund of capital gains tax on the land subject to reduction or exemption of capital gains tax as one of the self-sufficient farmland for not less than eight years as of the date of transfer.

C. Accordingly, on October 12, 2005, the defendant was incorporated into a residential area on October 12, 1991, and three years have passed since the date of transfer as of the date of incorporation into a residential area, and rendered a disposition rejecting the plaintiff's application for correction of capital gains tax (hereinafter referred to as the "disposition in this case").

D. On March 3, 2005, the Plaintiff filed an appeal with the National Tax Tribunal seeking the revocation of the instant disposition, but was dismissed on February 1, 2006.

[Ground of recognition] Facts without dispute, entry No. 1 to 5 of the evidence No. 1, and entry No. 2 of the evidence No. 2;

The purport of all pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

From November 20, 1973 to April 21, 1983, when the Plaintiff’s father ○ was self-fluored of each of the instant land, and from April 21, 1983, when ○○○ died, the Plaintiff was self-fluored for not less than eight years until April 19, 2004, and each of the instant lands was carried out by phase due to the reasons on the part of the project implementer and was incorporated into a residential area, and thus three years have elapsed since each of the instant lands constitutes reduction or exemption of capital gains tax, the instant disposition rejecting the Plaintiff’s application for reduction or exemption of capital gains tax is unlawful.

(b) Related statutes;

Attached Form 2. The entry is as shown in Annex 2.

C. Determination

If a person who has cultivated farmland while residing in a Si/Gun/Gu where farmland is located for not less than 8 years, transfers farmland, the amount of tax equivalent to 100/100 of the transfer income tax may be reduced or exempted, or the transfer income tax for farmland for which 3 years have elapsed from the date of incorporation into a commercial area and an industrial area among farmland located in the Special Metropolitan City. Metropolitan City as of the date of transfer shall not be reduced or exempted.

In this case, comprehensively taking account of the purport of Gap evidence Nos. 5 and Eul evidence Nos. 5-1, 2, 3-1, 6-2, and 6-4's evidence Nos. 6-2,34, each of the land of this case was incorporated into a residential area pursuant to the ○○○ Urban Planning Alteration Order No. 239 on Oct. 12, 1991. Of each of the land of this case, the land Nos. 1 and 3 was incorporated into the ○○○ National Industrial Complex Development Project Plan No. 1999-30 on Aug. 9, 1999. Since the land of this case was incorporated into the ○○○ National Industrial Complex Development Project Plan No. 1999-30 on Jan. 9, 2003, the plaintiff's assertion that the land of this case was already incorporated into the ○○ National Industrial Complex Development Project Plan No. 1602-53 on Jan. 9, 2003.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Relevant Acts and subordinate statutes

Restriction of Special Taxation Act (amended by Act No. 7322 of Dec. 31, 2004)

Article 69 (Abatement or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

(1) Where a resident prescribed by the Presidential Decree, who resides in the seat of a farmland for not less than 8 years, transfers the farmland in the agricultural promotion area under Article 32 of the Farmland Act to the Korea Agricultural and Rural Infrastructure Corporation under the Korea Agricultural and Rural Infrastructure Corporation and Farmland Management Fund Act (hereafter in this Article, referred to as the “Korea Agricultural and Rural Infrastructure Corporation”) or to such corporation as prescribed by the Presidential Decree which mainly runs the agriculture (hereafter in this Article, referred to as the “agricultural corporation”), not later than December 31, 2005, not later than 5 years, and where the farmland subject to a subsidy for managerial transfer direct payments as prescribed by the Presidential Decree, is transferred to the Korea Agricultural and Rural Infrastructure Corporation or agricultural corporations not later than December 31, 2010, the tax amount equivalent to 100/100 of the transfer income tax on the income accruing from a transfer of the land prescribed by the Presidential Decree, which has been cultivated for not less than 3 years, which is included in the residential area and industrial area under the National Land Planning and Utilization Act (hereafter in this Article, referred to as the “residential area”).

Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 18740, Oct. 19, 2005)

Article 66 (Abatement or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

(1) For the purpose of the text of Article 69 (1) of the Act, the term “resident prescribed by the Presidential Decree residing in the location of the farmland” means a person who has cultivated while living in the area falling under any of the following subparagraphs for not less than 8 years (5 years in the case of transfer to the Korea Agricultural and Rural Infrastructure Corporation (hereafter in this Article, referred to as the “Korea Agricultural and Rural Infrastructure Corporation”) or to the corporation under paragraph (2), and 3 years in the case of transfer of the farmland subject to a payment of management transfer subsidy under paragraph (3) to the Korea Agricultural and Rural Infrastructure Corporation or the corporation under paragraph (2) (including the area

1. An area in a Si/Gun/Gu (referring to an autonomous Gu; hereafter the same shall apply in this paragraph) where the farmland is located;

2. A Si/Gun/Gu area adjacent to an area referred to in subparagraph 1.

(4) For the purpose of the text of Article 69 (1) of the Act, the term “land as prescribed by the Presidential Decree” means the farmland, for which one has cultivated by himself for not less than 8 years (in case of transfer to the Korea Agricultural and Rural Infrastructure Corporation or the corporation under paragraph (2), 5 years; in case of transfer to the Korea Agricultural and Rural Infrastructure Corporation or the corporation under paragraph (3), 3 years) from the time of acquisition until the time of transfer, excluding that falling under any of the following subparagraphs. In this case, in calculating the period of farming inherited farmland, the period acquired and cultivated by the predecessor shall be

1. Of the farmland located in the Special Metropolitan City, Metropolitan City (excluding Guns located in Metropolitan Cities) or Si (excluding Eup/Myeon areas in Si of Do and agricultural complex forms established under the provisions of Article 3 (4) of the Local Autonomy Act), the farmland for which three years have passed from the date of incorporation into the residential area, commercial area and industrial area under the National Land Planning and Utilization Act as of the date of transfer: Provided, That the farmland for which three years have passed since the date of incorporation into the said area due to the implementation of the development project in the large-scale development project area (referring to the same project execution area), which falls under any of the following items, is farmland incorporated within the residential area, commercial area or industrial area under the National Land Planning and Utilization Act, and

(b) Area where the project area is larger than that prescribed by Ordinance of the Ministry of Finance and Economy;

Enforcement Regulations of the Restriction of Special Taxation

Article 27 (Scope, etc. of Farmland)

(3) The term “scale prescribed by the Ordinance of the Ministry of Finance and Economy” in Article 66 (3) 1 (b) of the Decree shall be one million square meters, but in the case of a housing site development project under the Housing Site Development Promotion Act or a housing site preparation project under the Housing Act,