Cho-2018-China-786 (2018.08)

A request for correction seeking the increase of tax credit carried forward shall be unlawful, and the amount paid as a determined retirement pension premium shall be the personnel expenses eligible for the tax credit for research and human resources development expenses.

It does not constitute grounds for filing a claim for correction under Article 45-2 of the Framework Act on National Taxes to increase the amount of carried-over tax credit, and the retirement pension of this case paid on the basis of a defined contribution plan shall be equivalent to personnel expenses subject to the tax credit for research and human resources development expenses under Article 10(1)

Article 45-2 of the Framework Act on National Taxes; Article 8(1) of the Enforcement Decree of the Restriction of Special Taxation Act

2018Guhap6525 The revocation of revocation of revocation of corporate tax rectification

○○ Co., Ltd.

Head of △ District Office

January 17, 2019

February 18, 2019

1. Of the instant lawsuit, the part concerning a request for correction seeking deduction of KRW 39,475,260 of the carried-over tax amount for the business year 2012 and the part concerning the claim for revocation of each corporate tax for the business year 2013 or 2016 among the disposition rejecting correction rendered by the Defendant against the Plaintiff on December 5, 2017 and the part concerning the claim for revocation of each corporate tax for

2. The Defendant’s disposition rejecting correction of KRW 219,092,960 of corporate tax for the business year 2012 against the Plaintiff on December 5, 2017 is revoked in excess of KRW 39,475,260 of corporate tax for the business year 2012.

3. The costs of lawsuit shall be borne by each person;

Cheong-gu Office

The defendant's rejection of correction of corporate tax of 219,092,960 won for the business year 2012 against the plaintiff on December 5, 2017, corporate tax of 35,082,832 won for the business year 2013, corporate tax of 274,910,534 won, corporate tax of 2014, corporate tax of 119,781,564 won, corporate tax of 2015, and corporate tax of 9,121,410 for the business year 2016.

1. Details of the disposition;

A. The Plaintiff was a corporation established on February 10, 200 for the purpose of software development, sale, etc., and operated the research institute with the recognition of the establishment of a research institute affiliated with a company on December 9, 2002 by the head of the Korea Industrial Technology Association (hereinafter “instant research institute”).

B. From the business year 2012 to the business year 2016 each month, the Plaintiff disbursed KRW 4,725,58,939, out of the fixed-term retirement pension premium under the Guarantee of Workers' Retirement Benefits Act, KRW 1,070,070,284,549 in the business year 2013, KRW 1,496,284,810 in the business year 2014, KRW 1,497,269,50 in the business year 2015, KRW 114,017,630 in the business year 2016, KRW 4,725,58,939 in the aggregate of KRW 114,017,630 in the business year 2016 (hereinafter “retirement pension premium”).

C. On October 23, 2017, the Plaintiff: (a) the instant retired pension premium was the Defendant before being amended by Act No. 11614, Jan. 1, 2013; (b) before being amended by Act No. 12173, Jan. 1, 2014; (c) before being amended by Act No. 12853, Dec. 23, 2014; (d) before being amended by Act No. 13560, Dec. 15, 2015; (b) before being amended by Act No. 14390, Dec. 20, 2016; (c) the amount to be deducted to KRW 301,79 through 207, and (d) the amount to be deducted to be deducted to be deducted to be deducted to be deducted to be deducted to be deducted to be deducted to be deducted to be deducted to be more than KRW 3601,701,79,797.

D. On December 5, 2017, the Defendant: (a) excluded the instant retirement pension premium from research and human resources development expenses pursuant to Article 8(1) [Attachment Table 6] [Attachment Table 11611] of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 23718, Apr. 10, 2012; (b) before amended by Presidential Decree No. 26959, Feb. 5, 2016; hereinafter “former Enforcement Decree of the Restriction of Special Taxation Act”); (c) excluded the Plaintiff from the research and human resources development expenses pursuant to subparagraph 1(a) [Attachment Table 6] of Article 8(1) [Attachment 6] of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Act No. 11611, Jan. 1, 2013; (d) before amended by Act No. 12852, Dec. 23, 2014; hereinafter referred to as “former Income Tax Act”); and (d) rejected the Plaintiff’s claim for correction from the relevant taxable year.

E. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on January 22, 2018, and the Tax Tribunal dismissed the Plaintiff’s claim on May 8, 2018.

Facts that there is no dispute over recognition, Gap evidence 1 through 5, Eul evidence 1 through 3 (including numbers for each case; hereinafter the same shall apply), the purport of the whole pleadings.

2. Determination as to the defendant's defense prior to the merits

The defendant, except for the part of the plaintiff's claim for refund of KRW 179,617,70 of corporate tax for the business year 2012, the part of the claim for deduction of KRW 39,475,260 of corporate tax for the business year 2012, and the part of the claim for correction of corporate tax for each business year 2013 through 2016 (hereinafter referred to as "part of claim for correction of the amount carried-over tax amount") seek the increase of the amount of carried-over tax amount which does not fall under the grounds for claim for correction under Article 45-2 of the Framework Act on National Taxes. Since the law and the claim for correction are not recognized, the part of refusal disposition as to each of the above requests for correction among the dispositions in this case is merely a civil petition, and thus it is not subject to appeal

Article 45-2 (1) of the Framework Act on National Taxes provides that if the tax base and tax amount entered in the tax base return exceed those to be reported under the tax-related Acts, or the deficiencies or refundable taxes entered in the tax base return fall short of the deficiencies or refundable taxes to be reported under the tax-related Acts, the request for the determination or correction of the

"However, the plaintiff applied the tax credit for research and human resources development expenses pursuant to Article 10 (1) of the former Restriction of Special Taxation Act, and applied the tax credit for 39,475,360 won for the business year 2012 and 2,298,32,764 won for the business year 2013, and 6,674,62,138 won for the business year 2014, 674,662,42,440,805 won for the business year 2015, 5,266,391,424 won for the business year 2016, and filed a request for correction to seek the increase of the carried-over tax credit amount for the business year 5,266,391,424 won for each of the above reasons." Thus, the plaintiff's request for correction can not be viewed as a "when the tax base and amount to be reported exceed the amount to be returned" under Article 45-2 of the Framework Act, or a request for correction.

Therefore, the defendant's defense prior to the merits is reasonable, and only the part of the disposition rejecting the correction of the refund claim amounting to KRW 179,617,700 in the business year 2012 among the disposition in the instant case is subject to determination on the merits, since the claim for correction against the increase in tax credit carried forward among the disposition in the instant case is unlawful.

3. Whether the part of the disposition in this case regarding the claim for refund of KRW 179,617,700 of the corporate tax for the business year 2012 is legitimate

A. The parties' assertion

The defendant asserts that the disposition of this case is lawful in light of the grounds for disposition and relevant statutes.

As to this, the Plaintiff did not constitute retirement income under Article 22 of the former Enforcement Decree of the Restriction of Special Taxation Act that provides that the retirement pension premium in this case is excluded from research and human resources development expenses under Article 8(1) [Attachment Table 6] 1. A. 1 of the former Enforcement Decree of the Restriction of Special Taxation Act, and thus, the retirement pension in this case constitutes labor expenses eligible for tax credit for research and human resources development expenses under Article 10(1) of the former Restriction of Special Taxation Act. Therefore, the instant disposition that did not recognize the retirement pension in this case as eligible for tax credit under the Restriction of

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

According to the above facts, the retirement pension premium in this case constitutes personnel expenses subject to the tax credit for research and human resources development expenses under Article 10(1) of the former Restriction of Special Taxation Act (see Supreme Court Decision 2016Du63200, May 30, 2017). The reasons are as follows.

① Employees of the instant research institute are recognized as employees working in the department exclusively in charge of the tax credits under the Restriction of Special Taxation Act. Based on the defined contribution plan, the retirement pension in this case actually paid by the Plaintiff according to whether the Plaintiff served as the research institute for each taxable year and each target employee, may be recognized as the expenses for the relevant disbursement business year, and the amount equivalent to the above insurance premium shall be deemed as a conclusive attribution

(2) The retirement pension premium of this case differs from the retirement pension premium of this case, which is only the reasonably estimated expenses for the calculation of profit and loss for a reasonable period of time, for the expenses actually disbursed by each researcher in response to research and human resources development for the pertinent taxable year.

③ In full view of the fact that the retirement pension premium in this case was paid not to an employee due to actual retirement or retirement, but to an amount already paid to each researcher at the time of expenditure, which constitutes the amount already paid to each employee during the pertinent business year, and that the retirement pension in this case was not paid in lump sum, and that the pertinent researcher selected to receive pension or lump sum payment only after the actual retirement, it cannot be deemed that the retirement pension in this case constitutes retirement income under Article 22 of the former Income Tax Act and Article 22 of the Income Tax Act.

Therefore, the part of the Defendant’s claim for refund of KRW 179,617,70 in excess of KRW 39,475,260 as illegal to seek deduction of carried-over tax amount among the disposition of refusal to rectify corporate tax of KRW 219,092,960 for the business year 2012 against the Plaintiff on December 5, 2017 should be revoked as it is unlawful.

4. Conclusion

Therefore, among the instant lawsuits, the part of the Defendant’s refusal to rectify the amount of KRW 39,475,260, which was issued against the Plaintiff on December 5, 2017, and the part of the Defendant’s claim for the deduction of KRW 39,475,260 for the business year 2012 and for the revocation of each corporate tax claim for the business year 2013 or 2016 is unlawful. Accordingly, the part of the Defendant’s claim for revocation in excess of KRW 39,475,260 for the disposition of refusal to rectify the amount of corporate tax for the business year 2012 is dismissed in entirety.