The criteria for determining oligopolistic shareholders who are the secondary taxpayers under the Framework Act on National Taxes and have de facto control over the management of the corporation.

Unlike Article 39(1)2 of the Framework Act on National Taxes (amended by Act No. 4672 of Dec. 31, 1993), Article 39 subparag. 2 of the former Framework Act on National Taxes (amended by Act No. 4672 of Dec. 31, 1993) has been amended to impose secondary tax liability on all oligopolistic shareholders only for those who own the greatest number of stocks or investments the largest number of stocks among oligopolistic shareholders and those who de facto control over the management of the corporation (b). In light of the amended legislative intent, whether a person is a de facto control over the management of the corporation under Item (b) above shall be determined based on whether the person is a majority of stocks as a truth, unless there are special circumstances, regardless of whether the person is a person who actually controls the management of the corporation.

Article 39 (1) 2 of the Framework Act on National Taxes

Plaintiff 1 and two others

(b) the Director of the Tax Office

Gwangju High Court Decision 96Gu2957 delivered on April 3, 1997

The part of the lower judgment against Plaintiff 1 is reversed, and that part of the case is remanded to the Gwangju High Court. All appeals by Plaintiffs 2 and 3 are dismissed, and the costs of appeal are assessed against the same Plaintiffs.

The grounds of appeal are examined.

1. As to Plaintiff 1’s ground of appeal

According to the reasoning of the judgment below, the court below found that the non-listed corporation listed in the judgment of the court below, based on the evidence of the court below, was registered as holding each of 8,000 shares (36.36%) among the shares issued on the register of shareholders 22,00 shares (36.36%) among the shares issued on the register of shareholders, Plaintiff 1, the father of Plaintiff 2, and Plaintiff 2, and Plaintiff 3, the births of Plaintiff 2, respectively, managed the non-indicted 4,00 shares (18.18%) and the plaintiffs were operating the non-indicted 1,00 shares (18.18%). The court below rejected the plaintiffs' assertion that the plaintiffs are merely nominal shareholders, on the ground that there is no evidence to acknowledge it, and determined that the plaintiffs constitute oligopolistic shareholders under Article 39 (1) 2 of the Framework Act on National Taxes (amended by Act No. 4672, Dec. 31, 193; hereinafter referred to as the "Act"). Therefore, the oligopolistic shareholders' tax liability for the non-party 195 shares.

Unlike Article 39(1)2 of the former Framework Act on National Taxes (amended by Act No. 4672 of the same Act), Article 39(1)2 of the same Act was amended to impose secondary tax liability on all oligopolistic shareholders only for a person who holds the largest number of stocks or has made the largest investment in stocks among oligopolistic shareholders, or a person who actually controls the management of a corporation (b). In light of the amended legislative intent, whether a person is a person who actually controls the management of a corporation as referred to in item (b) above shall be determined based on whether a person is a member of a group of stocks owned by the majority as a truth unless there are special circumstances, regardless of whether the person is a member of a group of stocks owned by the majority as a result of fact, and in accordance with the former Act prior to the amendment, whether the person is a person who actually controls the management of the corporation based on an oligopolistic shareholder should be determined based on whether the person is a member of the group of stocks owned by the majority,

Therefore, as stated in the judgment of the court below, it is difficult to conclude that Plaintiff 1 was registered on the register of shareholders who own 18.18% of the total shares issued by Nonparty company and operated Nonparty company with the rest of the plaintiffs as an oligopolistic shareholder who actually controlled Nonparty company's management. Thus, the court below should make a decision on how the above Plaintiff actually controlled Nonparty company's management through a hearing. However, the court below erred by failing to exhaust all necessary deliberations due to the misapprehension of the legal principles as to oligopolistic shareholder's secondary tax liability. The ground of appeal pointing this out is with merit.

2. As to the grounds of appeal by Plaintiffs 2 and 3

The above plaintiffs did not state the grounds of appeal in the petition of appeal and did not submit a statement of grounds of appeal within 20 days from the date of receiving the records of appeal on May 15, 1997, even if they received the notice of receipt of the records of appeal, and thus, they cannot dismiss the appeal dismissed pursuant to the main sentence of Article

3. Therefore, the part of the judgment of the court below against Plaintiff 1 shall be reversed, and that part of the case shall be remanded to the court below for a new trial and determination. The appeal by Plaintiffs 2 and 3 shall be dismissed and the costs of appeal by the dismissed part shall be assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Jae-soo (Presiding Justice)