The commencement date of business on business income under the Income Tax Act shall be based on the commencement date of business under the Value-Added Tax Act.

The starting date of business on business income under the Income Tax Act shall be based on the date of business commencement under the Value-Added Tax Act, and the starting date of business in this case shall be 2014.

Article 143 of the Enforcement Decree of Income Tax Act

2018Guhap69838 Revocation of Disposition of Imposing global income tax, etc.

OO

O Head of tax office

March 12, 2019

April 2, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The imposition of the global income tax on the Plaintiff of 2017O.O. shall be revoked. The imposition of the global income tax on the Plaintiff of 2014.

1. Details of the disposition;

A. The Plaintiff, jointly with O.O.O. A.A., completed the business registration of the Housing Construction and Sales Business and Sales Business, and commenced eight units of multi-family housing on the ground of O.O.O.O.O. O.O.O. O-O-O land (hereinafter referred to as the “multi-family housing of this case”) on 2014.O.O.O., for sale after obtaining approval for use (hereinafter referred to as the “instant business”).

B. On the premise that in 2013, which was the taxable period immediately preceding 2014, the sales revenue of the instant multi-family housing, the Plaintiff calculated the instant business income for the year 2014 by applying simple expense rate, and filed a return on global income tax amount by applying the special tax reduction and exemption for the construction business to the Defendant.

C. The director of the regional tax office: (1) The date of commencement of the instant project ought to be 2014 years from the new construction and sale of the instant apartment units; (2) notified the Defendant of data on taxation that the application of standard expense rate to calculate the amount of income belonging to 2014; and (2) the instant project does not constitute a construction business, and thus, should deny the application of special tax reduction and exemption.

D. Accordingly, the Defendant rendered the instant disposition with respect to the Plaintiff, 2017O.O.O., with respect to which the standard expense rate applied in calculating the estimated income for the year 2014, and deducting the amount of tax already paid from the calculated tax amount, the Defendant issued a notice of correction as global income tax for the year 2014.

Facts that there is no dispute over recognition, Gap evidence 1 through 3, Eul evidence 1-1, 2, and Eul evidence 2 and 3

Each entry, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case is unlawful for the following reasons.

1) 원고는 2013년에 이 사건 공동주택을 신축하기 위해 필요한 행위를 개시하였으므로, 이 사건 사업 개시일은 2013년으로 보아야 하고, 구 건물의 철거과정에서 생긴 부산물을 판매한 수입은 이 사건 사업으로 발생한 소득에 해당한다. 따라서 2014년 귀속 소득금액을 추계 산정함에 있어 원고는 구 소득세법 시행령(2016. 2. 17. 대통령령 제26982호로 개정되기 전의 것, 이하 '구 소득세법 시행령'이라고만 한다) 제143조 제4항 제2호 ㈏목 소정의 단순경비율 적용 대상 사업자에 해당한다. 그런데도 피고는 단순경비율 대신 구 소득세법 시행령 제143조 제3항 제1호의 기준경비율을 적용하여 원고의 2014년 귀속 소득금액을 추계결정하였다.

2) The Plaintiff leased a construction business license and directly constructed the instant apartment house. Therefore, the instant business income is income generated from the place of business that runs the construction business, and thus becomes subject to the application of special tax reduction and exemption under Article 7(1)1 (g) of the former Restriction of Special Taxation Act (amended by Act No. 12853, Dec. 23, 2014; hereinafter “former Restriction of Special Taxation Act”). Nevertheless, the Defendant excluded this and determined the Plaintiff’s comprehensive income tax.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Whether the Plaintiff constitutes a business entity subject to simple expense rate application

In full view of the language, structure, and purport of relevant statutes, such as the former Income Tax Act (amended by Act No. 13558, Dec. 15, 2015; hereinafter referred to as the “former Income Tax Act”) and the Value-Added Tax Act, the starting date of business of business income under the former Income Tax Act shall also be the starting date of business under Article 5(2) of the Enforcement Decree of the Value-Added Tax Act, which set the starting date of business under Article 6 of the Value-Added Tax Act. Therefore, the starting date of business in this case is 2014 years from the commencement of the sale of the instant apartment house by the Plaintiff, and it is difficult to view that the revenues from sales of by-products of the previous building constituted income accrued from the instant business, the Plaintiff

(1) Article 19(1) of the former Income Tax Act defines "income generated from various types of business, such as agriculture, forestry, fishery, mining, manufacturing, construction, etc." as business income, and Article 1-2(1)5 of the same Act defines "resident with such business income" as business income. In other words, business activities under the former Income Tax Act are premised on the actual occurrence of income. Therefore, the commencement date of business cannot be advanced until the preparation of business, which is the time of providing goods or services directly causing income, begins.

A preparatory act of business not only is considerably irregular and broad, but also it is difficult to objectively specify the starting point of business in terms of the aspects that the scope of business is set by the business entity’s subjective intent or necessity. In order to apply the simple expense rate stipulated under Article 143(4)2 of the former Enforcement Decree of the Income Tax Act, the business entity may voluntarily adjust the amount of income and avoid tax liability. This may cause interference with the legitimate exercise of national tax collection authority or cause inequality among taxpayers.

(2) Article 1-2(1)5 and Article 19 of the former Income Tax Act define a resident who has income derived from continuous and repeated activities under his/her own account and responsibility for profit-making purposes as an entrepreneur.

Meanwhile, Article 2 subparag. 3 of the Value-Added Tax Act defines a person who supplies goods or services independently for business regardless of whether they are for profit-making purposes. Here, the term "person who supplies goods or services independently for business purposes" means a person who supplies goods or services in the form of business to the extent that they can create added value and who continues to do so and repeatedly (see, e.g., Supreme Court Decision 98Du16705, Sept. 17, 199).

Therefore, it is necessary to interpret the starting date of the business related to the business income under the former Income Tax Act in a uniform manner with the starting date of the business under the Value-Added Tax Act. This is also true in the sense that the legal stability should be granted to the taxpayers of value-added tax and the business operators who are

In this regard, Article 168 (1) and (2) of the former Income Tax Act imposes an obligation on the head of the tax office having jurisdiction over a new entrepreneur to make a business registration under the former Income Tax Act, but the entrepreneur who has made a business registration under the Value-Added Tax Act is considered to have made a business registration under the former Income Tax Act, and Article 163 (1) of the former Income Tax Act imposes an obligation to prepare an invoice or receipt as prescribed by Presidential Decree and to issue it to the person who has received the goods or services if the entrepreneur who made a business registration supplies the goods or services, as

(3) Article 168(3) of the former Income Tax Act provides that Article 8 of the Value-Added Tax Act shall apply mutatis mutandis to a business operator who registers his/her business under this Act. Article 8(1) of the Value-Added Tax Act provides that a business operator shall apply for his/her business within 20 days from the commencement date of the business, but a person who intends to start a new business may apply for his/her business even before the commencement date of the business. Article 6 of the Enforcement Decree of the same Act, upon delegation from Article 5(2) of the Value-Added Tax Act for the taxable period, stipulates that the commencement date of the manufacturing business and non-commercial business, shall be the commencement date of the supply of goods or services.

(4) Article 143(4)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22580, Dec. 30, 2010) stipulates that Article 143(4)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22580, Dec. 30, 2010) shall apply simple expenses to all new business operators who start a business in the pertinent taxable period. Article 143(2)2 of the former Enforcement Decree of the Income Tax Act provides that a business other than those who start a new business in the pertinent taxable period shall apply simple expenses to those who start a business in the immediately preceding taxable period (including the increased amount of revenue due to a determination or revision). After that, Article 143(4)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22580, Dec. 30, 201); Article 143(1) of the former Enforcement Decree of the Income Tax Act provides that a new business shall apply to those who start a construction business after 210 days.

In addition, Article 143 (4) of the Enforcement Decree of the Income Tax Act, which applies to the portion of income in the taxable period that begins after February 13, 2018, is amended by Presidential Decree No. 28637, which applies to the portion of income in the taxable period that begins after January 1, 2019, provides that if the total amount of income in the immediately preceding taxable period falls short of the standard amount, if the income in the taxable period concerned falls short of the standard amount of double-entry bookkeeping, the standard expense rate shall be excluded from the application of simple expense expense ratio.

In light of the amendment history of Article 143 (4) of the Enforcement Decree of the Income Tax Act, the simple expense rate system is a system that intends to minimize the tax payment costs of small small-scale business operators who lack the capacity to keep records of the principal expenses required by the standard expense rate system, and the legislators seem to have gradually reduced the scope of business operators subject to the simple expense rate application. Furthermore, according to the language and text of the supplementary provision, legislators seem to understand "construction commencement", "construction business, construction business, and commencement of real estate development and supply business."

Therefore, considering these legislative intent, a long-term period exceeding a certain scale due to the nature of the project.

In the case of housing construction and sales business that runs a business among businesses, it is necessary to ascertain the commencement date of the business as objective and practical time when the supply of housing subject to sale is more than the commencement date that may depend on the business operator’s intent. The housing construction and sales business is included in real estate sales business (see, e.g., Supreme Court Decision 2008Du21768, Jul. 22, 2010). Therefore, it is difficult to view that the Plaintiff objectively expressed its intent to engage in the housing construction and sales business for profit prior to commencing the sale of

(5) Whether a person constitutes business income under the Income Tax Act ought to be determined according to social norms, taking into account the existence of the business profit purpose, the scale, frequency, mode, etc. of the business (see, e.g., Supreme Court Decision 91Nu6559, Nov. 26, 1991). The act of removing an old building to establish the instant apartment house is to increase the value of the building site, and the cost required therefor constitutes necessary expenses under Article 55(1) of the former Enforcement Decree of the Income Tax Act. Even if a part of profit was made by selling the by-products generated from removal, it is a matter to be considered in calculating necessary expenses, and this part of the income cannot be considered as the income amount of the instant business that serves as the basis for determining the application of simple expense rate.

2) Whether the special tax reduction applies to small and medium enterprises

Articles 2(3), 7(1)1(g) and 7(2) of the former Restriction of Special Taxation Act provide that an amount equivalent to the tax amount calculated by multiplying the income tax on the income accrued from the relevant place of business by 20/10 until the taxable year ending on or before December 31, 2014, shall be reduced or exempted from the income tax on the income accrued from the relevant place of business, and the classification of the type of business used in this Act shall be in accordance with the Korean Standard Industrial Classification publicly notified by the Commissioner of the Statistics Korea pursuant

According to the 9th Korean Standard Industrial Classification applied to the above law, "building construction business (Classification No. 411)" means industrial activities that newly build, extend, rebuild and rebuild a building including a prefabricated building by a contractor or a self-employed comprehensive constructor. Even if a contractor takes a subcontract for each construction field without directly performing construction activities, it is classified as "general construction business (Classification No. 41)" if a contractor takes a general responsibility for construction works and manages the whole construction works. However, the industrial activities that build a residential building by entering into a contract for the construction works of the entire building without directly performing construction activities and sell and sell it into "business of developing and supplying a residential building (Classification No. 68121)."

In light of the following circumstances, Gap evidence No. 2 and the overall purport of arguments, namely, (1) the constructor entered the building ledger of the apartment house of this case as BB, and (2) the plaintiff did not hold a construction business license and did not submit materials to deem that the plaintiff had human resources, physical facilities, or capabilities to construct the apartment house of this case under the overall responsibility of the construction work of this case, the business of this case constitutes "the development and supply business of residential building" under the classification of the Korean Standard Industry, and does not constitute "construction business" subject to reduction or exemption of the special tax amount for small and medium enterprises under the former Restriction of Special Taxation Act.

3. Conclusion

The plaintiff's claim is dismissed on the ground that it is without merit.