[1] The meaning of "tax base amount to be returned" which serves as the basis for determining whether an additional tax for underreporting under Article 41 (1) 2 of the former Corporate Tax Act is imposed, and in a case where a domestic corporation which is a taxpayer fails to deduct indirect foreign tax amount or include indirect foreign tax amount in gross income, and thus the tax base amount returned falls short of the tax base amount reasonably calculated by the tax authority, whether such shortage is subject to the additional tax for underreporting (affirmative)

[2] Whether a taxpayer's intentional or negligent act is required to impose an additional tax (negative), and whether the taxpayer's land, etc. is a justifiable ground for not imposing an additional tax (negative)

[1] The term "tax base amount to be returned" under Article 41 (1) 2 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) refers to the amount to be added and deducted as prescribed by the relevant Acts and subordinate statutes, such as the Corporate Tax Act, based on the tax base returned by the tax authority, and the final tax base amount to be calculated after deducting and deducting the amount to be added and deducted. Thus, in the course of the reduction of corporate tax by deducting and correcting the so-called indirect foreign tax amount under Article 24-3 (4) of the same Act, the tax authority shall regard the indirect foreign tax amount as a dividend pursuant to subparagraph 6 of Article 19 of the same Act (the dividends) and then calculate the new tax base amount included in gross income. Since a domestic corporation which is a taxpayer filed a tax base return on the first foreign tax amount and did not include the indirect foreign tax amount in the calculation of gross income, if the tax base amount was justifiably short of the tax base amount to be assessed as above, the amount to be underreported.

[2] Under the tax law, where a taxpayer violates various obligations, such as a tax return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, an administrative sanction imposed as prescribed by the Act is not considered, and the taxpayer’s intentional or negligent acts do not constitute justifiable grounds that do not cause any breach of duty.

[1] Article 19 subparagraph 6 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) Article 24-3 (4) (see current Article 57 (4)) Article 41 (1) 2 (see current Article 76 (1) 2) Article 78-2 (see current Article 94) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998), Article 2 subparagraph 4 and Article 47 of the Framework Act on National Taxes, Article 41 (1) (see current Article 76) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

[2] Supreme Court Decision 95Nu92 delivered on November 7, 1995 (Gong1995Ha, 3941), Supreme Court Decision 95Nu14602 delivered on May 16, 1997 (Gong1997Sang, 1784), Supreme Court Decision 96Nu6745 delivered on June 13, 1997 (Gong1997Ha, 2066), Supreme Court Decision 98Du16705 delivered on September 17, 199 (Gong1999Ha, 2248), Supreme Court Decision 98Du3532 delivered on December 28, 199 (Gong2000Sang, 4208Sang, 209Du208385 delivered on August 28, 2005)

[Defendant-Appellee] Plaintiff 1 and 2 others (Attorney Lee Ho-ho, Counsel for defendant-appellee

Head of Seocho Tax Office

Seoul High Court Decision 2002Nu2385 delivered on October 8, 2002

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

1. The "tax base amount to be returned" under Article 41 (1) 2 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998; hereinafter the "Act") refers to the tax base amount to be added and deducted as prescribed by the relevant Acts and subordinate statutes, such as the Corporate Tax Act, based on the tax base amount reported by the tax authority, and the final tax base amount to be calculated after deducting and deducting the amount to be added and deducted. Thus, in the course of the reduction and revision of corporate tax after deducting and correcting the so-called indirect foreign tax amount under Article 24-3 (4) of the Act, the tax authority shall regard the indirect foreign tax amount as a dividend, and then calculate the new tax base amount to be added to the gross income, if the domestic corporation which is a taxpayer returns the tax base for the first time and did not include the indirect foreign tax deduction and the gross income for this purpose, and thus, the tax base amount to be assessed properly falls short of the tax base amount to be imposed.

Examining the reasoning of the judgment below in light of the record and relevant statutes, it is proper to determine that the disposition of this case, which imposed an under-reported penalty tax on the difference between the Plaintiff’s tax base return and the Defendant’s tax base return amount newly calculated in the course of rectifying a reduction due to deduction of indirect foreign tax amount paid to the Plaintiff, is justifiable, and there is no error in the misapprehension of legal principles as to the imposition of an under-reported penalty tax when indirect paid foreign tax amount is included in the tax base as a dividend.

2. Additional tax under tax law is an administrative sanction imposed as prescribed by the Act in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, and the taxpayer’s intention or negligence does not constitute a justifiable reason that does not constitute a breach of duty (see Supreme Court Decisions 200Du3788, Nov. 13, 2001; 2001Du4689, Nov. 13, 2002).

In the same purport, the court below is justified in light of the above legal principles, and it is not justified in holding that the Plaintiff’s return on the tax base without including the amount of tax payable in the amount of tax payable at the time of the return of corporate tax because it was merely a site or error in the laws and regulations, and it does not constitute a case where there is a justifiable ground for not misunderstanding the Plaintiff’s duty. Accordingly, there is no error in the misapprehension of legal principles as otherwise alleged in the ground of appeal.

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition.

Justices Lee Yong-woo (Presiding Justice)