[Case Number] High Court Decision 2014No4269 ( December 16, 2014)
[Items] Global Income [Types of Determination]
[Determination] There is no submission of objective evidence on the fact that the amount equivalent to 00% of the amount claimed to have been returned to the customer out of the intermediary allowance received from the casino; it is unclear as to whether the identity of the recipient was actually paid because the name and purpose of the recipient was disturbed in the transmission column of the sales promotion expenditure submitted by the requester; and it is difficult to determine the amount claimed by the requester as necessary expenses for the intermediary allowance received by the requester. In light of the above, there was no error of disposition in this case.
[Related Acts and subordinate statutes] Article 19 of the Income Tax Act/Article 24 of the Income Tax Act/Article 27 of the Income Tax Act
The appeal is dismissed.
1. Summary of disposition;
(a) The claimant recruited the clients from the OO(OO) that operates the OO exclusively for foreigners (hereinafter referred to as the “OO”) and received allowances according to the customer’s game performance, but the OO did not file a final return on global income tax on the personal service business income from the OO, although the applicant did not file a final return on global income tax;
B. On July 17, 2014, the disposition agency estimated the applicant’s income by applying standard expense rate to the applicant’s business income, and subsequently determined and notified the applicant’s OO in 2009, OOO in 2010, and OOO in 201.
C. The claimant appealed and filed a petition for trial on October 13, 2014.
2. Opinions of the claimant and disposition agency;
A. The claimant's assertion
(1)OOO is an entity that runs an OO business called "OO" and the claimant has recruited new customers to OO, and when the customer has a loss from the game in the OO business, the claimant has entered into a contract from 2009 to 2011 as a customer solicitor who has received 10% of the loss as a customer intermediary's allowance. Pursuant to the terms and conditions of the contract, the claimant was paid the OO in 2009, the OO in 2010, and the OOO in 201 as a intermediary allowance, and the income tax and resident tax (3.3%) have been withheld thereon.
(2) The substance of brokerage allowances paid to the claimant is that if the OO pays 10% of the loss of the customer's game as a result of the customer's game, the claimant paid 90% of the paid allowances to the customer, and the claimant has been operated in the form of compensating for the customer's loss. In this regard, the OO submitted a certificate confirming that such a practice has been committed, and the content is that "the professional solicitor in the practice of OO marketing knows that he/she pays a certain percentage of the fee to the customer participating in the game."
Due to the characteristics of the operation of OO business, the amount of personal information of customers and the amount of compensation for losses to customers cannot be inevitably informed to the outside, and OO also has prepared a written confirmation prepared through OO advisory lawyer, because the grievance of the claimant is understood, but no more mentions or confirmations are possible.
Although it cannot be confirmed at the request of the claimant's continuous confirmation at the company level, it was silent by the company at the time that it received the confirmation from the manager of the OO's business, and it was submitted to the customer with the confirmation of the employee who had delivered the amount of the funds to the customer since then since then, (9 copies of the sales promotion expenditure and the resident registration copy) and the referral allowance received from the OO was paid to the claimant, not directly paid to the customer by the claimant, but paid 90% of the customer's loss from the brokerage allowance to the customer by receiving the amount equivalent to 10% of the customer's loss on a daily basis, and then delivered the remainder to the applicant.
(3) The remainder remaining after the claimant paid to the customer from the total allowances received from the OO is as listed below, the content of the claimant’s actual income is as listed below:
The income of the requester for the attached Table 1>
(4) On March 15, 1985, the claimant was cancelled the resident registration due to the report of emigration overseas, and two children were married in 2003 and reported to the OO, and is currently residing with the wife and children.
The income tax must be imposed on the income actually accrued and must be revoked by examining the applicant’s sound position. In the pre-assessment review that was filed before this case’s taxation to the disposition agency, the claimant, in view of the fact that the applicant’s assertion is insufficient and thus it is difficult to accept, the applicant’s request was not accepted by the investigator to directly verify the facts and to determine whether to impose the tax, but the applicant’s demand was not accepted. The claimant’s assertion is a fact that there is no falsity, and the applicant’s claim should be revoked so that no tax is imposed.
(b) Opinions of disposition agencies;
(1) The claimant's receipt of OO as a customer recruitment allowance is confirmed by the receipt for business income withholding, but 10% of the customer's loss was received as an allowance and returned 90% of the amount to the customer in such a manner as to cover the loss to the customer, and there is no submission of objective supporting documents. Although the claimant submitted a written confirmation from the manager of OO and OOO, the name and purpose of the column for delivery of the details of the sales promotion expenditure submitted is not verified as to whether it was actually paid or not, and the customer's personal information is not verified.
(2) As to the existence of necessary expenses corresponding to the amount of income, the taxpayer should assert and prove the amount of income. However, as the claimant fails to present objective and detailed evidence, such as payment details of the amount claimed as the necessary expenses, personal information of the recruited game customer, etc. in addition to the documents written by OOO and employee, it is justifiable to determine the amount of income of the claimant as the estimate and impose the comprehensive income tax on the requester pursuant to Article 80 of the Income Tax Act and Article 143 of
3. Hearing and determination
A. Key issue
Whether 90% of the good offices allowance paid by the claimant may be deemed necessary expenses when calculating the amount of income.
B. Relevant statutes
(1) Income Tax Act;
Article 19 (Business Income) (1) Business income shall be the following income generated during the relevant year:
15. Incomes accruing from service business related to entertainment, culture and sports, and other public, repair and private service business;
16. Incomes accruing from the domestic service business.
(2) The business income shall be the amount obtained by deducting the necessary expenses required therefor from the gross income amount in the current year.
(3) Matters necessary for the scope of business income shall be prescribed by Presidential Decree.
Article 24 (Calculation of Total Amount of Income) (1) The calculation of the total amount of income on each income of a resident shall be based on the total amount received or received during the year.
(2) In cases under paragraph (1), if any income other than money is imported, such income amount shall be calculated according to the value at the time of transaction.
(3) Matters necessary for the scope, calculation or determination of the total amount of income received or received shall be prescribed by Presidential Decree.
Article 27 (Calculation of Necessary Expenses) (1) In the calculation of real estate rental income, business income, or other income, the amount to be included in the necessary expenses shall be the sum of the expenses corresponding to the total amount of income in the current year as generally accepted
(2) The expenses corresponding to the total amount of income before the current year, which are not appropriated as the necessary expenses before the current year, shall be considered the necessary expenses.
(3) Matters necessary for calculation of necessary expenses shall be prescribed by Presidential Decree.
Article 144 (Method of Collection of Tax on Business Income through Withholding and Delivery of Withholding Receipt) (1) When a withholding agent pays the amount of income from business incomes as prescribed by the Presidential Decree, he shall withhold the income tax calculated by applying the withholding tax rate to
(2) The withholding agent who pays the business income amount as prescribed by the Presidential Decree, shall, in paying the business income amount, deliver to the receiver the withholding receipt specifying the income amount and other necessary matters, as prescribed by the Presidential Decree.
(3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis when a withholding agent pays income amount accruing from service fee determined by Presidential Decree.
When a resident intends to calculate necessary expenses pursuant to Article 27 in calculating the real estate rental income amount, business income amount, or other income amount, he/she shall receive the evidential documents for the disbursement of such expenses and keep them for five years from the end of the final return period: Provided, That a person who has received the deduction of losses incurred five years prior to the start of each taxable period shall keep the evidential documents for the taxable period in which the relevant losses occurred by no later than May 31 of the following year after the taxable period in which the deduction of evidential documents for the taxable period in which the relevant losses occurred.
(2) In cases falling under paragraph (1), where any person having any real estate rental income or business income is supplied goods or services from a business proprietor (including a corporation) in connection with his/her business and expends the price thereof, he/she shall receive supporting documents falling under any of the following subparagraphs: Provided, That this shall not apply
1. Invoice under Article 163 of this Act and Article 121 of the Corporate Tax Act;
2. Tax invoice under Article 16 of the Value-Added Tax Act;
3. Credit card sales slip under the Specialized Credit Financial Business Act (in case of transactions using things similar to a credit card, as prescribed by the Presidential Decree, it shall include the documentary evidence thereof);
4. Cash receipts.
(3) In the application of the provisions of paragraph (2), if an entrepreneur fails to receive the tax invoice under subparagraph 2 of the same paragraph, when he issues and keeps the purchaser-issued tax invoice pursuant to the provisions of Article 126-4 (1) of the Restriction of Special Taxation Act, he shall be deemed
(4) In applying paragraphs (1) through (3), matters necessary for the receipt and keeping of evidential documents for the disbursement of expenses and other necessary matters shall be prescribed by Presidential Decree.
(2) Enforcement Decree of the Income Tax Act
Article 55 (Calculation of Necessary Expenses, such as Real Estate Rental Income, etc.) (1) Necessary expenses corresponding to the total amount of income of each year shall be as follows:
1. Purchase price (excluding a purchase reduction or a purchase discount) of the raw materials for the commodities or products sold and the incidental expenses thereto. In this case, the original purchase price and incidental expenses thereto shall be applicable, if the relevant business operator has consumed such ones for a business use, as have been purchased for other purposes;
1-2. Incidental expenses related to sale, such as storage, packing expenses, transportation expenses, sales incentives, sales allowances, etc. (in cases of sales incentives and sales allowances, including cases of payment without prior agreement);
7. Expenses for the business property:
(a) Repair expenses for maintaining current status of the business property (including a part of idle facilities attached to the relevant business);
(b) Management expenses and maintenance expenses;
(c) Rent for the business property;
8. Taxes and public charges related to the business: Provided, That such ones as are not included in the necessary expenses under the Act and this Decree shall be excluded;
27. Expenses similar to those under subparagraphs 1 through 26, which are corresponding to the gross amount of incomes concerned;
Article 143 (Estimated Settlement and Correction) (1) "Grounds prescribed by Presidential Decree" in the proviso to Article 80 (3) of the Act means any of the following cases:
1. Where necessary account books and documentary evidence are missing or important parts are incomplete or false in the calculation of the tax base;
2. Where the contents of the entry are obviously false in light of the scale of facilities, number of employees, raw materials, market prices, various charges, etc. of commodities or products.
3. Where the contents of the bookkeeping are obviously false considering the quantity of raw materials used, electric power used and other operational conditions.
(2) Where the tax base is estimated, determined and revised under the proviso to Article 80 (3) of the Act, the amount of tax base shall be calculated by making personal deduction and special deduction under Articles 50 through 52 of the Act from the income amount assessed under paragraph (3).
(3) Where the estimation, determination or correction of income amount is made under the proviso to Article 80 (3) of the Act, it shall be made by the following methods: Provided, That the provisions of subparagraph 1-2 shall apply only to persons subject to the application of simple
1. The method of determining or revising, as the relevant amount of income (hereafter referred to as "standard amount of income" in this Article), the amount obtained by deducting the amount under the following items from the amount of income. In such cases, if the amount to be deducted exceeds the amount of income, the amount in excess shall be deemed non-existent: Provided, That where the standard amount of income is in excess of the amount calculated by multiplying the amount of income under subparagraph 1-2 by the ratio stipulated by the Commissioner of the National Tax Service, the amount calculated by multiplying such ratio may be determined as the amount of income
(a) Purchase costs (excluding those for fixed assets for business: hereafter the same shall apply in this Article) and rent expenses on the fixed assets for business which are paid or payable by the documentary evidences;
(b) The amount paid or payable by the relevant documentary evidence as wages and retirement benefits for employees;
(c) The amount obtained by multiplying income by standard expense rate;
1-2. The method of determining or revising as income amount the amount obtained by deducting the amount obtained by multiplying the income amount by the simple expense rate;
2. When the standard or simple expense rate has not been determined or the account books and other documentary evidence have been destroyed or lost due to natural disasters or other force majeure, the method of determining or revising the amount of income by taking into account the income amount of other businessmen of the same business type in which the account books and other documentary evidence are deemed to be the most accurate: Provided, That where no other businessman of the same business type exists and account books, etc. have been destroyed or lost after the final return of tax base, the amount of income shall be determined or corrected according to the report referred to in
3. Other reasonable methods recognized by the Commissioner of the National Tax Service.
C. Facts and determination
(1) According to the psychological data, the following facts are confirmed.
(a)The details on which the disposal authority determines and notifies the comprehensive income tax by applying the standard expense rate to the business income (customers) of the claimant for the business income of the claimant are as shown in the attached Table 2:
(B) On March 15, 1985, the claimant's resident registration was cancelled on March 15, 1985, and at present, it is confirmed by the resident registration card and the certificate of domestic residence report submitted by the claimant that he/she has an OO residence by the change of domestic residence on March 4, 2014.
(C) The petitioner entered into a customer brokerage agreement with the OO as shown in the table 3> and participated in a series of sales promotion activities, such as customer recruitment and settlement of game performance.
[Attachment 3] Customer Mediation Contract
(a) Contract term: the customer who is recruited by the claimant on March 4, 2009 and November 30, 201. (b) on November 30, 201 shall be the new customer or dormant customer with no visit records from the OO. The contract term shall be 10% of the loss (law amount) incurred as a result of the settlement of the game performance at the time of the end of the game of the customer. The additional brokerage commission shall be paid in accordance with the following guidelines: (i) If the sum of the loss (law amount) incurred as a result of the settlement of the game performance by the customer from the first day of each month exceeds the OO, the excess amount shall be more than 5% of the total amount: Provided, That if there is any taxpayer for whom no result of settlement of the game performance (law amount) loss has accrued during the above period, the total sum of the customer's loss (law amount) to be paid to the claimant on the date of completion of the contract shall be included in the aggregate of the above customer's value-added tax on the date of the contract.
(D) According to the integrated national tax computer network, the applicant’s annual personal service business income is as shown in the next Table 4>
[Attachment 4] Annual Personal Service Business Income
(E) The claimant asserted that the OO received 10% of the customer loss in return for the recruitment of customers as an allowance, and that 90% of the amount was returned to the customer as a result of compensating for the loss, and that the OO received a written confirmation as shown in Table 5:
[Attachment 5] Certificate
1. We conclude, from 2007 to 2011, our country entered into a contract with an applicant subject to this case as a specialized solicitor under Article 3, subparagraph 10 of the Rules of OO Business (OO Notice No. 2004-4) with the applicant for this case from 2007 to 2011, and paid the applicant the fees for a specialized solicitor in return, and the terms and conditions between our country and the specialized solicitor paid 10% of the amount of the game loss caused by the customer recruited by the requester as the fee for a specialized solicitor.3. Under the practice of OO marketing, we confirm that the professional solicitor is aware that the fee for a specialized solicitor received from the operator of the OO will be paid a certain percentage of the amount to the customer participating in the game.
(f) The details of sales promotion expenditure submitted by the OO or OO, an employee of the OO's team, along with a copy of the driver's license, are as follows: The following: The following: The name and purpose of the transmission column is not specified, and the customer's personal information provided is not verified.
(2) Comprehensively taking account of the above facts and relevant laws and regulations, the claimant asserts that 90% of the brokerage allowances received from the OO from the customer loss should be returned to the customer and the remainder should be received only, so the claimant's actual income amount should be deducted from the amount corresponding to 90% of the brokerage allowances paid by the OO, but there is no objective submission of evidence on the fact that 90% of the brokerage allowances paid by the OO was paid to the customer, and it is unclear whether the payee's name and purpose were not verified as the addressee's personal information was not verified in the delivery column of the sales promotion expenses submitted by the claimant. In addition, it is difficult to view the amount claimed by the claimant as necessary expenses for the brokerage allowances received by the OO, and it is determined that there was no error of taxation imposed by estimating the amount of income on the brokerage allowances paid by the claimant.
This case shall be decided as ordered in accordance with Articles 81 and 65 (1) 2 of the Framework Act on National Taxes because the petition for adjudication has no merit as a result of the review.