early 2012Gu1393 (25 May 2012)

Since it is insufficient to recognize that there was no purpose of tax avoidance, gift tax is legitimate.

It is insufficient to recognize that the title trust was made for the acquisition and maintenance of foreign-invested enterprises' occupancy qualifications in the industrial complex without the purpose of tax avoidance, and attraction of foreign-invested investment within the deadline and smooth loan implementation, but there is no purpose of tax avoidance.

2012Guhap3134 Revocation of Disposition of Imposition of Gift Tax

The two AAA

Head of the Tax Office

March 29, 2013

April 26, 2013

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing gift tax of KRW 000 against the Plaintiff on December 5, 2011 shall be revoked.

1. Details of the disposition;

A. BB Heavy Industries Co., Ltd (hereinafter referred to as the “B Heavy Industries”) was established on December 13, 2005 for the purpose of cutting and manufacturing of vessel components on December 13, 2005. As of December 31, 2005, thisCC, the representative of the BB Industries, held 4,000 shares out of 10,000 total shares and 3,000 shares, respectively. However, the Plaintiff, as a Japanese resident, was recommended to make an investment in the BB Industries. The Plaintiff acquired 30,00 shares of the BB Heavy Industries following capital increase with capital increase on March 22, 2006, thereby satisfying the qualification requirements (foreign investment ratio, more than 10%) to move in the industrial complex of a foreign-invested company of the DB Heavy Industries.

C. After that, the Plaintiff accepted the request from thisCC to lend the acquisition title at the time of the additional capital increase in BB industry. On May 1, 2006, thisCC purchased 20,000 shares by offering capital of BB industry at KRW 00,000,000, and on June 8, 2006, it acquired 10,000 shares (hereinafter the above 1.20,00 shares) under the name of the Plaintiff while offering capital at KRW 3.4 billion, and thereafter transferred all of the shares of this case on October 15, 2008.

D. On December 5, 2011, the Daegu regional tax office conducted a tax investigation on the transfer of the instant shares, and notified the Defendant that “CC was acting in trust with the Plaintiff,” and the Defendant imposed gift tax of KRW 000 on the Plaintiff (hereinafter “instant disposition”).

E. Accordingly, the Plaintiff filed a request with the Tax Tribunal on March 5, 2012, and on May 2012.

25. A decision of dismissal was received;

[Ground of Recognition] The non-speed facts, Gap 1, 2, 4, 5, and 1 and 2 (including each natural disaster) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In light of the following facts: (a) thisCC acquired the instant shares in the name of the Plaintiff for the purpose of acquiring and maintaining the business qualification of a foreign investment zone in the surrogate Corporation, attracting foreign investment amount, and implementing the loan smoothly from the Korea Development Bank; (b) even if it owns the instant shares in the name of the Plaintiff, there is no difference in the transfer income tax rate; and (c) the Plaintiff did not have any omission in transfer income tax while disposing of the instant shares; and (d) it is merely a minor reason thatCC’s profits from tax reduction acquired through title trust for the instant shares were unexpectedly minor; and (b) the instant disposition made on a different premise was unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) The legislative intent of Article 45-2(1) of the Inheritance Tax and Gift Tax Act is to effectively prevent the act of tax avoidance using the title trust system and realize the tax justice. As such, the proviso of the same Article is applicable only if the purpose of the title trust is not included in the purpose of the tax avoidance, and in this case, the burden of proving that there was no purpose of the tax avoidance can be proved by means of proving that there was another purpose of the tax avoidance. Therefore, with respect to the fact that there was no purpose of the tax avoidance, the nominal owner who bears the burden of the burden of the burden of the burden of proof can be proved by means of proving that there was another purpose of the tax avoidance. However, as the nominal owner who bears the burden of the burden of the burden of the burden of the burden of the burden of the burden of the burden of the burden of the burden of the burden of proof that there was an obvious tax avoidance and that there was no tax avoidance in the name trust, and there was no tax avoidance at the time of the title trust or in the future (see, e.g., Supreme Court Decision 2004Du120

2) In light of the following facts found in light of the evidence presented earlier, and the results of the conference ordering the submission of financial transaction information to the head of the JDB Industrial Bank JDB branch in this Court, and the following facts are comprehensively considered, and only the statements in Gap 3-1 and two alone are insufficient to recognize thatCC merely trusted the shares of this case to the Plaintiff for the purpose of acquiring and maintaining the occupancy eligibility of foreign-invested enterprises in the industrial complex of Korea, attracting the foreign-invested enterprises in the term of foreign-invested enterprises, attracting the foreign-invested investment amount, and implementing the loan smoothly from the Korea Development Bank without any purpose of tax avoidance, and there is no evidence to prove that there was no purpose of tax avoidance, and the Plaintiff’s above assertion that the company held the title trust on the ground that it was unrelated to tax

(A) On March 22, 2006, the Plaintiff invested KRW 300 million in the BB industry, and the BB industry already met the requirements for the eligibility of foreign-capital invested companies in the industrial complex of foreign-capital invested companies in the surrogate Payment Corporation (at least 10% of foreign investment ratio).

(B) The Guidelines for the Operation of Foreign Investment Zones (Ordinance of the Ministry of Commerce, Industry and Energy No. 2007-153) was partially amended on April 23, 2007, but the ratio of foreign investment is not changed to 10%, and the standard-type factory for surrogate payment is not changed to 10%, and the previous provisions apply to the eligibility of companies moving into a foreign investment zone for surrogate payment, which has moved before the enforcement of these Guidelines. In the case of BB industries, there was no need to increase the ratio of foreign investment above

(C) The head of the JDB Industrial Bank Jin branch of this Court stated that there was no need to increase foreign investment shares in response to this Court’s response to an order to submit financial information, and that BB industry was not required to increase its capital in proportion to the increase of foreign investment shares at the time of the increase of its capital, and that the NB industry was not required to increase its foreign investment shares in order to meet the requirements for the occupation and residence of the foreign investment zone of

(D) When calculating the instant shares as one’s own shares, it was likely that the instant shares were oligopolistic shareholders of BB industry and were likely to avoid secondary tax liability, global income tax, etc. that may arise in the future due to the instant title trust.

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.