early 2012 Middle 4897 ( December 21, 2012)

The mileage used in the second transaction with mileage accumulated at the time of the first transaction of goods or services shall not fall under the discount excluded from the value-added tax base.

It is difficult to regard the mileage as a discount because it is paid all the proceeds of ordinary sales and separate accumulation of the mileages, so it is similar to the sales incentive for attracting customers in the future, and it is not a direct deduction, and it is not a "direct deduction."

Article 13 of the Value-Added Tax Act

2013Guhap51848 Disposition Rejecting Value-Added Tax

1.A 2.BB 3.Co., Ltd. GwangjuAAA

1. As shown in the Defendants’ list (the Gangseo Tax Office et al., Counsel for the defendant-appellant);

August 22, 2013

October 31, 2013

1. All of the plaintiffs' claims are dismissed.

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

Cheong-gu Office

The Defendants’ refusal to correct the entries in attached Form 2 against the Plaintiffs shall be revoked in entirety.

1. Details of the disposition;

A. Status of the plaintiffs

The Plaintiff AAA was established as theCC department store on December 9, 1955 and engaged in the department store business. The Plaintiff BB was a distribution specialized company established by the Plaintiff AA on May 1, 201 as the personnel division of department stores, department stores, and large-scale retail stores business division. The Plaintiff AA was established on April 10, 1995, and the Plaintiff Gwangju AA was established on April 10, 1995, and is a distribution specialized company that sells clothing, miscellaneousity, etc. in the department store and large-scale retail stores business.

(b) AAA Points System;

1) From March 2006, when the customer purchases goods, etc. at nationwide AA department stores, BB, AAB, BB sunset, AAB sunset, or AAA’s store operated by the affiliate companies, etc. of the Plaintiffs and the Plaintiffs, the Plaintiffs introduced the AAAA’ Point System through which the customer purchases goods from the operating store using the accumulated points or exchanges them with the AAA’s gift certificates.

"2) AAA AA point system is divided into “AAAA AA point that can be accumulated and used by customers only within the plaintiffs’ operating store,” and “AAAAAA AAA white point that can be used by customers outside the operating store for any general DD shop. In the case of AAA points, customers may accumulate a certain amount of AAAA point in proportion to the purchase amount when they purchase goods or receive services from the plaintiffs’ operating store, and then use the accumulated points when they purchase goods or use services from the plaintiffs’ operating store after converting them into one point per one point.”

"1) When a customer purchases or uses goods or services at the plaintiffs' operating store (hereinafter referred to as "the primary transaction"), the plaintiffs accumulated and paid a value-added tax equivalent to a certain percentage of the purchase amount to the relevant customer. The plaintiffs reported and paid a value-added tax based on the total amount received from the customers as the tax base for the primary transaction; and 2) after the primary transaction, when a customer purchases goods, etc. at the plaintiffs' operating store and makes a transaction by using all or part of accumulated AAA Points points (hereinafter referred to as "the secondary transaction"), the plaintiffs reported and paid a value-added tax including the value-added tax on the tax base pursuant to Article 48 (14) of the Enforcement Decree of the Value-Added Tax Act (hereinafter referred to as "the Enforcement Decree of this case").

During the period from July 23, 2012 to July 25, 2012, the Plaintiffs accumulated to the Defendants during the period from the first to the second period from 2009 to the second period from the Value-Added Tax Act (hereinafter referred to as the “instant points”) shall not be included in the first transactional tax base because the amount of discount under Article 13(2)1 of the Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013; hereinafter referred to as the “Act”) constitutes the amount of discount under Article 13(2)1 of the Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013; hereinafter referred to as the “Act”), and if included in the tax base, the Plaintiffs were required to refund the KRW O in the aggregate reported and paid by the Defendants during the second period from January 20 to July 20, 2012. The Defendants were to be included in the instant tax base.

[Reasons for Recognition] Each entry of Gap evidence Nos. 1 through 5 (including branch numbers), and the purport of the whole pleading

2. Whether the rejection disposition of this case is legitimate

A. The plaintiffs' assertion

The Enforcement Decree of the instant case provides that the mileage settlement amount shall be included in the tax base in the secondary transaction, thereby recognizing the AAA Points accumulated by the Plaintiffs as a right similar to cash. Therefore, in the first transaction, the points equivalent to the points accumulated by the Plaintiffs according to the terms and conditions of supply to the customer constitutes cash and a right similar to cash, and should be deducted from the sales amount of the first transaction (it is possible that ex post facto loss occurs, and should be deducted from the sales amount of the second transaction only).

If the points accumulated in the primary transaction are included in the tax base in accordance with the Enforcement Decree of the instant case, and the points accumulated in the primary transaction are not recognized as a sales discount, the value-added tax shall be levied on the amount equivalent to the points.

B. Relevant statutes

Attached Form 3. The entry in the relevant statutes is as follows.

(c) Fact of recognition;

(1)The terms and conditions of AAA Points shall include the following main contents:

Article 3 (Abstract of AAA Points Services)

1. The content of AAA Points Services shall be as follows, and customers who intend to use it shall subscribe to membership through all the procedures prescribed in this Agreement:

a) Accumulation Services

Members may be entitled to accumulation of AA Points at us, affiliated companies, and affiliated member shops through the purchase of goods or use of services.

(b) settlement (use) services;

Members may use accumulated AAA Points to purchase goods or use services at us, affiliated companies and affiliated stores: Provided, That in the case of AAA Capital Points, it may be used not only in our place of business, but also DD affiliated stores and DD franchise stores, and in this case, it may be used in addition to or together with DD points.

(c)other services;

We may develop additional services and provide them to members, in addition to the services listed above.

2. us shall operate a AA Points website (htp:/www.AA.com) for the smooth provision of AA Points Services, and Members may use various services provided on the AAA Points website: Provided, That any member who intends to use the AA Point website shall undergo the procedures for registration of members as determined by us, such as the designation of membership ID and password.

Article 8 (Accumulation of AAA Points)

1. AAA point is given according to the rate of accumulation as determined by us in proportion to the amount of the purchase or use of the goods by the members, or in accordance with the rate of accumulation as agreed between us and affiliated or affiliated member shops: Provided, That when the purchase price of the goods or the use price of the services is converted into AAA point, any point below the decimal point is cut off.

2. AAA point shall, in principle, be accumulated at the time of the purchase of goods or use of services by members, but if it has not been accumulated at that time, it may be accumulated within 30 days from the date of purchase of goods or use of services: Provided, That it shall be presented to us at the time of accumulation, along with a card and a valid receipt to the relevant affiliated company or affiliated member store.

Article 9 (Correction, Cancellation or Termination of AAA Points)

(3) The term of validity of AAA Points shall be 24 months from the date of accumulation, and it shall not be used after accumulating AA Points, and any AA AA Points whose term of validity has expired shall automatically be terminated by the monthly prior to the expiration of the term of validity: Provided, That in cases of DD Points accumulated by AA carshing Card, it shall be at the risk of complying with the terms and conditions of the relevant DD Members.

Article 10 (Use of AAA Points)

1. AA Points may, in principle, be used on an online (on-line) affiliate store unless otherwise specified in the agreement between us or between us and us or separately provided for, in principle, at the time the cumulative points are at least 1,000 pores (or, in cases of AAAsh Corres Points, where the cumulative points are at least 500 poress, they may be used, and at the time of the special exercise period determined by us, 1,000 poress.) Members may present cards and passwords at us, or settle all or part of the proceeds from the purchase of goods or the use of services in accordance with the prescribed procedures set by us.

3. In principle, the usable points shall be converted into one won per 1 point, but we may change the amount of conversion through the amendment of the terms and conditions in accordance with the provisions of Article 4 of the Terms and Conditions.

(ii)AA Points shall set aside 1,000 won at the time of purchase of KRW 1,00,000 (0.1%) and shall be the accumulated amount, the amount used, and the rate of use of AAA Points and AAAA Capital Points from 1, 2009 to 2, 2011:

See Table 6 of the Court Decision

3) The Enforcement Decree of the instant case was newly established on February 18, 2010 (Presidential Decree No. 22043). The legislative intent and the content prior to the amendment are as follows.

· the theory of the revised tax law

(2) Grounds for amendment

It is clear that the mileage is included in the value-added tax base as the case where the mileage is accumulated and the whole amount of the price of the goods is settled through the mileage has increased recently.

(3) Time of application

From the date of entry into force, the application and the interpretation of the right of compensation (in the case of the consumption tax in the case of re-influence, 319, 29 March 29, 2006).

The amount equivalent to the mileage shall be included in the value-added tax base if the business operator who sells goods online sets aside the mileage equivalent to the percentage of sales to the purchasing customer and the customer makes payment by the mileage accumulated in whole or in part at the time of the purchase of goods, and this interpretation shall apply from the portion of goods supplied after the enforcement date.

[Ground of recognition] Evidence No. 4, Evidence Nos. 2 to 4, and the purport of the whole pleadings

D. Determination

Article 13(2) of the Act provides that "The amount falling under any of the following subparagraphs shall not be included in the tax base." Article 52(2) of the Enforcement Decree provides that "The amount of discount stipulated in Article 13(2)1 of the Act provides that "the amount of discount shall be the amount directly deducted from the ordinary supply value at the time of supply of goods or services in accordance with the terms and conditions of the quality, quantity, and payment of the cost of delivery and supply." The purpose of excluding such discount is to exclude the amount of discount from the tax base of value-added tax because the conditions of supply concerning the quality, quantity, delivery, etc. of goods or services are not the actual amount of deduction or deduction from the tax base of value-added tax (see Supreme Court Decision 2011Du8178, Apr. 11, 2013). Therefore, in order for the company to deduct the amount of discount from the tax base of value-added tax as alleged by the plaintiffs, such amount shall not be deducted from the sales amount of the goods or services."

Ultimately, the issue is whether this case’s point will be excluded from the tax base of value-added tax, and whether this case’s point will be included in the tax base, considering that it is “the next point after the supply of goods or similar amount” under Article 13(3) of the Act. Considering that this case’s point cannot be considered as the amount directly deducted from the value of supply of the first transaction, and that this case’s point can not be considered as “the discounted interest rate prescribed in the Act,” and ultimately, is included in the tax base of the first transaction, and the instant refusal disposition based on this premise is lawful.” (1) The point itself is not enough to provide customers or the Plaintiffs with the same economic value as that of the next point in the second transaction, and it is not necessary to use the same as that of the next point in the second transaction.

However, whether the points used in the secondary transaction should be directly deducted from the sales amount of the secondary transaction as a discount for the secondary transaction, should be determined in accordance with the provisions of the E.S. Act. However, the points in this case are determined in accordance with the terms and conditions of the primary transaction, and cannot be said to be determined in accordance with the terms and conditions of the secondary transaction, so even if the price is discounted, it cannot be said to be a “E.S.” In this case, where a business operator donates goods produced or acquired in connection with his/her own business to his/her customers or to many unspecified persons, if the price of the donated goods is not included in the price of the goods, which are the main transaction, the value-added tax is imposed by deeming the goods as the supply of the goods (see Article 6 of the Act, Article 16(2) of the Enforcement Decree of the said Act, and even if the points in this case are not paid any monetary value, the value-added tax is levied as a gift gift, regardless of whether it is subject to the said provision or discount after the second transaction.

A merchandise coupon is identical to cash with a bearer certificate that is sold in advance, and the part that is deducted as a discount rate of KRW 100,000 when the merchandise coupon is sold in advance, is not a merchandise coupon itself, and thus, it cannot be compared with the point of this case and the merchandise coupon in the same line. In other words, the price that the customer pays at the time of purchase of the merchandise coupon is an advance payment by the company, not a value-added tax transaction, and the purchase of the merchandise coupon is not a transaction. It is a taxable transaction only when the goods or services are supplied through exchange with the merchandise coupon, etc. (Article 21 (1) of the Act). For example, where the merchandise coupon is sold in cash or credit and the merchandise coupon is exchanged with the merchandise coupon, it is the time of supply at the time of actual delivery of the goods (Article 21 (1) of the Act). It is not a taxable transaction where the merchandise coupon is purchased with the merchandise coupon, but it is only an amount of 100,000 won being deducted from the sales discount.

If a company pays merchandise coupons or discount coupons to customers in connection with the sales of the primary transaction and receives only the amount obtained by subtracting merchandise coupons or discount coupons from the sales of the primary transaction, the amount equivalent to merchandise coupons or discount coupons shall be deducted directly from the sales of the primary transaction. However, in cases where merchandise coupons or discount coupons are provided after the primary transaction, the value-added tax on the primary transaction is not different because it is not related to the primary transaction base, and it is not only sales expenses but also an discount that is directly deducted from the secondary transaction base, and even in the secondary transaction, the value-added tax is only the amount calculated by deducting merchandise couponss or discount couponss after deducting the value-added tax from the market price of the secondary transaction. Thus, there is no difference from the point in this case.

"The Court Decision 2011Guhap20390 decided January 25, 2013 alleged by the plaintiffs as the case excluded from the second transaction tax base as the "E" is about the system under which EE directly deducts the amount of discount discount from the fee to be paid by the sales members if the transaction is made through the use of discount (the first transaction) by issuing a discount coupon in connection with the pertinent transaction (the first transaction), the deducted discount coupon amount shall be deemed as the amount of discount that is not included in the tax base for the service fee, and not the amount of discount in the second transaction. In this case, in the first transaction, the value-added tax shall not be imposed on the point of this case since the goods are supplied as the goods subject to the first transaction (the accumulation of the points in this case is the first transaction and the value-added tax shall not be imposed on the goods subject to the same taxation. It cannot be said that the second transaction cannot be imposed on the goods supplied through the second transaction.

3. Conclusion

Therefore, all of the plaintiffs' claims are dismissed. It is so decided as per Disposition.