Review Corporation 2009-0019 (2009.06.09)

Appropriateness of the disposition of forest land as non-business land

It is alleged that forest land was acquired in order to operate the real estate sales business, but there is no data on the situation that forest land should be acquired without fail, so this disposition as land for non-business use is legitimate

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant’s imposition of corporate tax of KRW 2,300,883,560 against the Plaintiff on October 1, 2008 shall be revoked.

1. Circumstances of the disposition;

A. The Plaintiff, a company engaged in the real estate development, sale, lease, sale business, etc., left 6,58,00,000 won in total by acquiring each of the forest land listed below (hereinafter “each of the forest land of this case”) in total in 3,483,00,000 won in the business year 207, and transferring it in total to 10,041,000,000 won.

B. The Plaintiff calculated 829,729,460 won, subtracting the sales cost of KRW 3,508,901,903, and sales expenses and general management expenses of KRW 5,702,490,798 from the sales amount of KRW 10,041,03,80 at the time of the declaration of corporate tax in 2007, as net income, and reported and paid KRW 829,150,296 as corporate tax, subject to the tax adjustment on the insurance premium, and did not report the corporate tax on the transfer income of each of the instant land.

C. On October 1, 2008, the Defendant determined each of the instant lands as forest land under Article 55-2 (2) 2 of the former Corporate Tax Act (amended by Act No. 8852, Feb. 29, 2008; hereinafter referred to as the “former Corporate Tax Act”), and notified the Plaintiff of KRW 2,300,83,560 of the corporate tax in 2007 (hereinafter referred to as the “instant disposition of imposition”).

[Ground of recognition] Facts without dispute, Gap evidence 2, Eul evidence 1 to 8, Eul evidence 2 and 3, the whole purport of the pleading

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Whether each forest of this case is a non-business land

Article 55-2 (2) 2 (c) of the former Corporate Tax Act (amended by Presidential Decree No. 19891, Feb. 28, 2007; hereinafter the same) stipulates that "the forest directly related to the corporation's business is one of the cases not deemed the land for non-business purpose" and delegates its specific contents to the Presidential Decree. Based on such provision, Article 92-6 (4) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19891, Feb. 28, 2007; hereinafter the same) stipulates that "the forest directly related to the corporation's business, which is prescribed by Ordinance of the Ministry of Finance and Economy, is "the forest directly related to the corporation's business" in subparagraph 7, and it is not yet established by the Ordinance of the Ministry of Finance and Economy. Thus, since the scope of the forest excluded from the land for non-business purpose cannot be determined as the land for non-business purpose.

(2) Whether necessary expenses are deducted or not

Even if each forest of this case is deemed land for non-business use, the "book value" under Article 55-2 (6) of the former Corporate Tax Act includes necessary expenses (the expenses directly paid for the transfer of each forest of this case, such as salary, bonus, sales commission, etc.). Therefore, in calculating the transfer margin of each forest of this case, the above necessary expenses should be deducted in calculating the transfer margin of each forest of this case. If the "book value" under Article 55-2 (6) of the former Corporate Tax Act is interpreted as the amount of depreciation by the acquisition cost or acquisition cost, it is relatively heavy compared to the Income Tax Act that recognizes the total transfer cost as necessary expenses, and the corporate tax to be additionally paid due to transfer income such as land is remarkably in violation of the principle of prohibition of property rights and excessive prohibition, and is also contrary to the substance over form principle and the principle of equality of taxation.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Whether each forest of this case can be viewed as non-business land

(A) Article 55-2 (1) 3 of the former Corporate Tax Act stipulates that the tax amount calculated by multiplying the transfer income of land, etc. by 30/10 shall be paid as the corporate tax on capital gains from transfer. Article 55-2 (2) of the same Act stipulates that "land falling under "non-business land" shall be listed as the corporate tax on capital gains from transfer. Among them, subparagraph 2 of the same Article stipulates "forest" as one of "non-business land" in principle, and exceptionally excludes the forest listed in each item. In this regard, subparagraph 2 (c) of the same Article excludes the forest listed in each item as one of the above "land excluded from non-business land" in consideration of the owner, location, utilization status, possession period, area, etc. of the above land, which is deemed directly related to the corporation's business.

(B) The purpose of Article 55-2 (1) 3 of the former Corporate Tax Act (amended by Act No. 55-2 (1) is to strengthen the corporate tax on capital gains from the transfer of land for non-business use of a corporation, and to stabilize the real estate market and recover speculative profits by suppressing the demand for real estate speculation through the excessive use of land for the purpose of property increase, as it is in order to strengthen the taxation on land for non-business use of a corporation. Unlike the case of farmland or stock farm land, Article 55 (2) 2 of the former Corporate Tax Act, unlike the case of farmland or stock farm land, etc., it is deemed that land for non-business use is included in principle in the land for non-business use, and it is evident that the land not falling under the non-business use land is included in the land for non-business use in light of the nature of the corporation acquiring it, or the degree of land use, etc., it is to prevent the corporation from acquiring the forest excessively by ice

In full view of the legislative intent, regulatory structure, etc. of the Act, the scope of "land for non-business" subject to transfer as one of the special taxation cases for capital gains on the land of a corporation is determined pursuant to Article 5-2 (2) of the former Corporate Tax Act, and therefore, forest land is, in principle, non-business land pursuant to Article 5-2 (2) 2 of the former Corporate Tax Act. However, forest land is excluded from the land for non-business under the Ordinance of Ministry of Finance and Economy enacted pursuant to subparagraph 7 of Article 92-6 (4) of the Enforcement Decree based on the forest land and its item (c). However, Article 55-2 of the above Act and Article 92-6 (4) of the Enforcement Decree of the same Act stipulate the scope of exclusion from the land for non-business and stipulate the cases that can be excluded from the land for non-business in light of the above legislative purpose, so it is merely a concrete specification of the matters delegated by the above superior laws and regulations, and thus, the Ordinance of the Ministry of Finance and Economy does not establish the corporate tax for non-business purposes.

In the case, the plaintiff acquired each forest land of this case for the purpose of real estate sale as a profit-making corporation, and there is no data on the situation that the plaintiff must acquire each forest land of this case for the purpose of its business operation. Thus, each forest land of this case shall be viewed as forest land for non-business use under the main sentence of Article 55-2 (2) 2 of the former Corporate Tax Act, unless there are special circumstances, and it shall not be deemed that the forest land of this case is directly related to the business of the plaintiff corporation under Article 92-6 (4) 7 of the former Enforcement Decree of Corporate Tax Act and shall not be excluded from the scope of non-business land. Accordingly

(2) Whether necessary expenses are deducted or not

The principle of no taxation without law is a requirement for taxation, or the requirements for non-taxation or tax reduction and exemption, and the tax law is interpreted as a legal text, barring special circumstances, and it is not allowed to expand or analogically interpret without reasonable grounds (see, e.g., Supreme Court Decision 2007Du9884, Oct. 26, 2007).

Article 55-2 (6) of the former Corporate Tax Act provides that capital gains, such as land, shall be calculated by deducting the book value at the time of transfer from the transfer amount of land, etc. In this context, the "book value" means the tax book value (the amount obtained by subtracting the depreciation reserve from the acquisition value) under its language, and unless there is a separate provision that the necessary expenses should be deducted, such as Article 95 (1) of the Income Tax Act, it cannot be viewed that the necessary expenses should be deducted as capital gains, and the necessary expenses should be deducted from gross profit when calculating the net income of a corporation and have already been reflected in the calculation of the corporate tax for each business year.

Furthermore, Article 55-2(6) of the former Corporate Tax Act prohibiting the deduction of expenses incurred in the transfer of land for non-business use as seen above from the deduction of speculative profits on land for non-business use owned by a corporation, thereby suppressing speculative demand for land and stabilizing the real estate market. In light of the above provision’s purport, it cannot be deemed that the said provision violates the principle of property rights guarantee and the principle of excessive prohibition under the Constitution, or is contrary to the principle of tax equality.

Therefore, the disposition of this case, which did not deduct the transfer cost claimed by the plaintiff on the premise that "the book value under Article 55-2 (6) of the former Corporate Tax Act" is viewed as acquisition value, is just, and the plaintiff's assertion disputing this is groundless.

3. Conclusion

Thus, the plaintiff's claim of this case seeking revocation on the ground that the disposition of this case is illegal is dismissed as it is without merit.