Cho Jae-2017-China-3972 ( November 21, 2017)

In 2010, the revised Act and subordinate statutes must select the method of market price application again after the lapse of three years from the application of the interest rate on the current loan when calculating the interest on the provisional payment.

In principle, the recognition interest rate shall be the weighted average loan interest rate, but in case of selecting the interest rate on overdraft loan, the interest rate on overdraft loan shall be applied for two business years following the selection of the interest rate on overdraft loan. Thus, the weighted average loan interest rate in principle shall be applied again after the business year chosen in the meaning of the text and two business years following the second business year, and if the interest rate on overdraft loan is selected,

Article 89 of the Enforcement Decree of Corporate Tax Act

2018Guhap10434 Revocation of Disposition of Corporate Tax Imposition

Han RiverA Corporation

The Director of the Z Tax Office

June 26, 2018

July 24, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The interest rate for the provisional payments selected by the Plaintiff at the time of declaration of corporate tax for each business year

2015, 2013 2014 2015, 2010

The weighted average loan interest rate per interest rate per annum;

The Defendant’s disposition of imposition of each corporate tax (including additional tax) listed in attached Form 1, which was made against the Plaintiff on March 15, 2017, shall be revoked.

1. Details of the disposition;

A. The Plaintiff, a juristic person established on October 2, 190 and engaged in the wholesale business of medicine, etc., has been working as a juristic person by paying provisional payment to the representative director who is a specially related person.

B. The Plaintiff reported and paid corporate tax calculated on the basis of the following interest rate pursuant to Article 89(3) of the Enforcement Decree of the Corporate Tax Act for calculating the market price (the price determined as applicable or applicable to normal transactions between persons who are not persons with special interest) pursuant to Article 52 of the Corporate Tax Act with respect to the provisional payment provided to the representative director who is a related party upon filing a corporate tax return for each business year in 2010 or 2015.

C. On March 15, 2017, the Defendant again calculated the recognized interest rate in the business year 2014 and 2015, and notified the Plaintiff of the disposition of corporate tax correction (hereinafter “instant disposition”) stated in the attached Table for the Plaintiff on the ground that “In the case of choosing the interest rate in the current loan at the market price, the current loan interest rate shall be the market price.” Since the Plaintiff selected the current loan interest rate in the business year 2013, the current loan interest rate shall be applied in the year 2014 and 2015.”

[Reasons for Recognition] Unsatisfy, Gap evidence 1 to 3, Eul evidence 1 and 2 (including provisional number), the purport of the whole pleadings

2. Determination on the legitimacy of the instant disposition

A. The plaintiff's assertion

1) Article 89(3)2 of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010; hereinafter “instant amended provision”) provides that, with respect to the application of the recognition rate of loans provided to the representative director who is a specially related party in connection with the assessment of corporate tax, “for the selective loan interest rate, the selective loan interest rate shall be the market price for the selective loan year and the two subsequent business years shall be the selective loan interest rate,” and there is no express provision for the business years after the three business years, and it is consistent with the principle of no taxation without law to interpret the amended provision in favor of the taxpayer in the event there is a vacancy in the interpretation of tax law. Thus, in interpreting the amended provision of this case, where a corporation selects the recognition rate of loans to the specially related person as the interest rate for the current loan, the average interest rate for the current loan interest rate for the two preceding business years shall be applied to the Plaintiff for 20 years from the 20-year average loan interest rate for the next 20-year loan interest rate for the two preceding business years.

2) Notwithstanding the limited interpretation that a corporation selects the interest rate on the current loan as the market price on a three-year basis, the Plaintiff’s choice of the interest rate on the current loan in the two business years (2010 and 2011) after the selection of the interest rate on the current loan in the business year 2009, and the current loan interest rate was again selected in the business year 2012, the current loan interest rate in the following business years shall be applied to the current loan interest rate in the business years 2013 and 2014. However, there was an error of applying the weighted average loan interest rate in the business years 2014, unlike the previous three business years in 2013. However, since the Plaintiff selected the weighted average loan interest rate in the business years 2015 after the expiration of the previous three business years, it cannot be deemed that there was an error of law in applying the weighted average loan interest rate in the business years 2015, the disposition of revising the corporate tax in this case was unlawful.

3) The Plaintiff, through Internet consultation on the website of the National Tax Service, responded to “in the event that the first overdraft interest rate was applied in the business year 2009, three years have passed since then, it is possible to apply the weighted average loan interest rate in the business year 2014.” The instant disposition on the ground that the Plaintiff, while the Plaintiff, while making a corporate tax in good faith, was against the principle of trust protection.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the Plaintiff’s assertion

A) The amendment process of the relevant statute

(1) Article 89(3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19891 of Feb. 28, 2007) stipulates that the interest rate on overdraft loans between related parties should be the market price.

(2) Since then, Article 89(3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010) (amended by Presidential Decree No. 19891, Feb. 28, 2007) provides that “The weighted average loan interest rate with respect to money lending between related parties shall be the market price, but where it is impossible to apply the weighted average loan interest rate, the weighted average loan interest rate shall be the market price.” Thus, in relation to money lending among related parties, the recognition interest rate, in principle, applies the weighted average loan interest rate. The reason for the amendment is that “In the case of money lending between related parties, the interest rate on the overdraft loan is applied regardless of the interest rate at the time of borrowing which is deemed the market price, and the substance of the transaction is not reflected. In the case of money lending or borrowing between related parties, it is anticipated that the interest rate corresponding to the substance should be applied at the market price, thereby

(3) Thereafter, Article 89(3) of the Enforcement Decree of the Corporate Tax Act amended by Presidential Decree No. 22577, Dec. 30, 2010 stipulated that “The weighted average interest rate on loans between related parties shall be the market price, but where the pertinent corporation selects the interest rate on overdraft loans as prescribed by Ordinance of the Ministry of Strategy and Finance along with the report under Article 60 of the Corporate Tax Act, the current interest rate on overdraft loans shall be the market price for the business year in which it selects the interest rate on overdraft loans as the market price and the two business years thereafter shall be the market price for the current business year and the current

B) There is room to interpret the purport of the instant amended provision to the effect that, if the Plaintiff maintains the choice of the interest rate on overdraft loans for at least three business years, it may choose an weighted average loan interest rate again.

However, the following legal principles and the circumstances revealed by Gap evidence No. 3 (including the virtual number) and the purport of the entire pleadings are gathered. The purport of the amended provision of this case is to interpret the current loan interest rate as the market price for the business year chosen if the party choose the current loan interest rate as it is, and the two business years thereafter, if the party selects the current loan interest rate again, the current loan interest rate for the two business years thereafter should be the market price. Meanwhile, it is reasonable to interpret the revised provision of this case to mean that the current loan interest rate for the two business years (including the current business year and 2012) after the plaintiff selected the current loan interest rate for the two business years (including the current business year and 2011 and 2012) from the time of filing a corporate tax return for the business year 2010 after the entry into force of the revised provision of this case, the current loan interest rate for the previous business year is to apply the current loan interest rate again in the business year 2013, and thus, the plaintiff's assertion that all of this part is justified.

(1) A request for clarity of the tax-related provisions is the core content of the no taxation without law, and the tax-related Acts should be strictly interpreted as it is (see, e.g., Supreme Court Decision 94Da34968, Jun. 11, 1996).

(2) Article 89(3) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010) provides that “In the case of choosing the interest rate on the overdraft loan, the period of compulsory selection shall not be “for the business year in which the interest rate on the overdraft loan was selected as the market price and at least two business years thereafter,” but “for the business year in which the interest rate on the overdraft loan was selected as the market price and two business years thereafter,” and Article 89(3) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010) provides that “The overdraft loan interest rate shall be applied to the overdraft loan interest rate in the case of a corporation selecting the overdraft loan interest rate in the meaning of the text, the overdraft loan interest rate shall be applied again in the business year in which the overdraft loan interest rate was selected as the market price.

(3) The instant amended provision, when a corporation selects the interest rate on overdrafts, requires it to be selected as prescribed by Ordinance of the Ministry of Strategy and Finance along with a report under Article 60 of the Corporate Tax Act, and the Plaintiff, in each business year from 2010 to 2013, since the enforcement of the instant amended provision, selected the interest rate applied to the “the confirmation rate of the provisional payment” as the interest rate on overdrafts in accordance with Article 43(5) of the Enforcement Rule of the Corporate Tax Act in each business year from 2010 to 2013, and reported and paid corporate tax for the pertinent business year by applying the interest rate to the “the specification of the recognition rate of the provisional payment, etc.”. The Plaintiff selected the applicable interest rate as the weighted average loan interest rate in

(4) Article 1 of the Addenda of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22577, Dec. 30, 2010) as well as the instant amended provision provides that “The amended provisions of Article 89(3) shall begin to apply to the first reported business year after this Decree enters into force.” As such, the instant amended provisions, which introduced the choice of interest rate and the mandatory period of application after January 1, 201, shall apply from the corporate tax of 2010, which was reported after January 1, 2011. Meanwhile, the Plaintiff selected the monthly average loans to the Defendant for the business year of 2010, which was after the amendment of the said Enforcement Decree, regardless of the application of the recognized interest rate for the previous business year, the instant amended provisions were applied to the Defendant for the 201-year average loans for the two preceding business years (201 and year 2012), and the Plaintiff shall apply the fixed interest rate for the 201-year loans for 2010 years thereafter.

2) Judgment on the Plaintiff’s assertion

In general, in order to apply the principle of trust and good faith to the acts of the tax authorities in tax law relations, the tax authorities should give the taxpayer a public opinion that is the subject of trust, and the taxpayer should not be responsible for the taxpayer to believe that the expression of opinion is justifiable, and the taxpayer should act in trust and what is the taxpayer's interest. Third, the taxpayer should act in violation of the above opinion. Fourth, the taxpayer's interest should be infringed by the disposition against the above opinion. ① Internet National Tax Counseling Center's response to the Internet National Tax Counseling Center is a simple consultation or guidance method for counseling 1,000 days based on professional knowledge and experience among the counseling staff or small-scale business operators, and it is difficult to view it as an administrative agency's public opinion. ② According to the evidence No. 4, the National Tax Service's inquiry about statutory interpretation is a content opposite to the above counseling center's response to the above opinion (see, e.g., Supreme Court Decision 2007Du3177, Apr. 37, 2009).

Therefore, we cannot accept the Plaintiff’s assertion that the response of the National Tax General Counseling Center is an expression of public opinion by the tax authority among the details of the Plaintiff’s Internet counseling (Evidence A No. 4).

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.