Whether Article 124-2 (7) of the Enforcement Decree of the Corporate Tax Act is null and void

Article 59-2 (3) (proviso) of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990) provides that “The transfer value and acquisition value are unclear” shall be included not only in cases where both the transfer value and acquisition value are unclear, but also in cases where only one of the two values are unclear in terms of equity. As a matter of the interpretation of Article 59-2 (3) of the same Act, the calculation of transfer value and acquisition value, which are the tax base of special surtax, shall be based on the actual transaction value, and the transfer value and acquisition value shall be based on the standard market price determined by the Presidential Decree even in cases where both the transfer value and acquisition value are unclear, as well as in cases where the transfer value and acquisition value are unclear, the transfer value and acquisition value shall be based on the standard market price determined by the Presidential Decree even if the standard market price as determined by the Presidential Decree are adjacent to the actual transaction value, and thus, it shall not be deemed that the transfer value and acquisition value are not clear in accordance with the principle of no taxation without the law.

Article 59-2(3) of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 1990); Article 124-2(7) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1295 of May 1, 1990)

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Domin, Attorneys Park Domin-young and 1 other, Counsel for plaintiff-appellant-appellant-appellant-appellant-appellant-appellant-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellant-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellant-Appellee-Appellee-Appellee-Appellee-Appellee-Appellee-Appellant-Appellee-Appellee-Appellee-Appellee-Appellee

[Defendant-Appellee] Plaintiff 1 and 3 others

Head of Seogsan Tax Office

Busan High Court Decision 93Gu944 delivered on November 3, 1993

The judgment of the court below is reversed and the case is remanded to Busan High Court.

We examine the grounds of appeal.

1. According to the court below's determination, the defendant established and operated a mental health sanatorium on the land of this case, which is the basic property owned by a social welfare foundation, and transferred part of the transfer amount to the non-party 2,440,090,000 won on April 14, 1990, the transfer amount shall be the actual transaction value. The transfer amount shall be the actual transaction value, and the acquisition value shall be the value calculated by converting the transfer amount into the actual transaction value pursuant to Article 124-2 (7) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 12878 of Dec. 30, 199) (amended by Presidential Decree No. 12995 of May 1, 190, hereinafter referred to as "Decree").

2. The court below determined that the transfer value and the acquisition value under the standard market price prescribed by the Presidential Decree shall be the transfer value and the acquisition value, respectively, in calculating transfer margin, which is the tax base of special surtax, under the proviso of Article 59-2 (3) of the former Corporate Tax Act (amended by Act No. 4282 of Dec. 31, 190, hereinafter referred to as the “Act”), and Article 124-2 (7) of the Decree provides that “Where either of the transfer value or acquisition value is unclear, the unclear value shall be converted by the following formula.” The standard market price formula is so established as to allow access to the actual transaction value. Since the transfer value and the acquisition value are clear and unclear, the transfer value shall be calculated based on the actual transaction value, and where the transfer value and the acquisition value are converted by the value of the special surtax pursuant to Article 124-2 (7) of the Decree and it shall not be deemed that the transfer value and the acquisition value under Article 24-2 (3) of the Act cannot be calculated on the basis of equity and equity between the transfer value and the two (3).

3. The main sentence of Article 59-2 (3) of the Act provides that "the transfer margin under paragraph (1) shall be the amount obtained by deducting the amounts listed in the following subparagraphs from the transfer margin," and the proviso of this Act provides that "if the transfer margin and the acquisition price are unclear, the transfer margin and the amount based on the standard market price at the time of transfer determined by the Presidential Decree shall be the transfer margin and the acquisition price at the time of its acquisition, respectively," and the proviso of the above Act provides that "the transfer margin and the amount based on the standard market price at the time of its acquisition shall be deemed to be more than 30.0 billion won, not only if the transfer margin and the acquisition price are determined by the Presidential Decree, but also if the transfer margin and the acquisition price are not clear by the Act No. 2686, Dec. 21, 1978, the transfer margin and the acquisition price at the same time shall be deemed to be 198.28 billion won, and thus, it shall be deemed to be established that only one of the 9.28.18.5 billion won.28

Nevertheless, the court below determined that the tax disposition in this case, which calculated transfer margin pursuant to the provision of Article 124-2 (7) of the Decree, was lawful on the premise that the provision of Article 124-2 (7) of the Decree is valid. Thus, the court below erred by misapprehending the legal principles as to Article 59-2 (3) of the Act or by erroneously interpreting Article 124-2 (7) of the Decree, and it is clear that such illegality has affected the conclusion

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Chief Justice Kim Jong-soo (Presiding Justice) (Presiding Justice), Kim Jong-soo Park, Park Jong-ho (Presiding Justice) and Lee Jong-hee Kim Jong-sung (Presiding Justice)