Cho High-2016-Seoul Government-0211 (Law No. 16.01)

The exclusion period for imposition of global income tax due to the disposition of income at the time of the evasion of corporate tax by fraud or other unlawful means is 10 years.

Where a person evades corporate tax by fraud or other improper means, global income tax on the amount of income accrued from the disposition of income shall be ten years from the exclusion period, and where a person liable to pay income tax on the portion accrued to the representative director out of the outflow amount due to the embezzlement of the representative director establishes a liability to pay income tax on the portion accrued to the representative director, it

The exclusion period for national tax assessment under Article 26-2 of the Framework Act on National Taxes

Article 67 of the Corporate Tax Act

2016Guhap73559 The revocation of revocation of a revocation of the rectification of global income tax

KimA

○ Head of tax office

April 14, 2017

May 12, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's rejection disposition against the plaintiff on November 25, 2015 is revoked with regard to each claim for correction of KRW 000 of global income tax for the year 2008 and KRW 000 of global income tax for the year 2009.

1. Details of the disposition;

A. From August 2004 to August 2012, the Plaintiff held 51.5% of the shares issued by the BB Savings Bank as the representative director of the BB Savings Bank (hereinafter “BB Savings Bank”) from around August 2004, and held 51.5% of the shares issued by the BB Savings Bank. On August 2012, 2012, the Plaintiff transferred the management right of the BB Savings Bank toCC.

B. On August 13, 2014, the Plaintiff was sentenced to a suspended sentence of three years for a two-year period from ○○ District Court ○○○○ Branch ○○○○○○ Branch 201,000 (hereinafter referred to as “instant embezzlement”) and the said judgment became final and conclusive around that time, on the grounds that he embezzled the sum of KRW 1,321,106,640 (hereinafter referred to as “criminal facts”) as set forth in the following (i) during the period in which the Plaintiff was in office as the representative director of the BB Savings Bank, as the sum of KRW 1,321,106,640 (hereinafter referred to as “the instant embezzlement”).

① The embezzlement, which pretended to be paid by a certified judicial scrivener for KimD: around November 10, 201, the Plaintiff concluded a false business agreement and advisory agreement with the certified judicial scrivener KimD, and embezzled KRW 33,00,000 by forging on November 16, 201 as if the said agreement were performed.

② The embezzlement, which pretended to pay advisory fees to the KF: around 2011, the Plaintiff embezzled the amount of KRW 257,400,000 (=the advisory fees of KRW 114,400,000 + the advisory fees of KRW 143,000 for the KF + KRW 143,00,000,000) by pretending to enter into a false financial advisory service agreement with the KF and to pay advisory fees to them.

③ From around 2011 to 2012, the Plaintiff paid the credit loan fee in excess of KRW 30,000,000 among them around December 5, 2011, and embezzled 400,000,000 and 300,000,000 to Yellow K, respectively, by paying the credit loan fee in excess of KRW 50,00,000 to GJ around September 5, 201.

④ Embezzlements that pretended to be paid by a certified judicial scrivener for leM: On December 31, 2007, the Plaintiff concluded a false contract with a certified judicial scrivener with a certified judicial scrivener, and embezzled 39,600,000 won from January 1, 2008 to December 31, 2008, by pretending that the said contract was performed.

⑤ On December 16, 2008, the Plaintiff, who pretended to pay retirement consolation benefits to both J: (a) paid 50,000,000 won to both J as retirement consolation benefits; and (b) embezzled 45,000,000 won as of the following day.

6. Embezzlement, which pretended to pay the management agency fee to the LAB: Around December 1, 2008, the Plaintiff established the KAB and entered into a contract with the NAB for the management agency, and paid the management agency fee in excess of the fees under the management agency contract, and embezzled the fee in cash from January 1, 2009 to September 201, 201, and using it for personal purposes.

C. Upon the commencement of an investigation agency’s investigation into the embezzlement case, the JJ and Yellow K paid KRW 762,157,092 to BB Savings Bank on June 2013. On October 28, 2013, the Plaintiff paid KRW 259,00,000 as a deposit account (see, e.g., Supreme Court Decision 36,000,000; KRW 45,000,000 related to the facts; KRW 168,00,000 related to the facts; KRW 168,00,000 related to the facts; KRW 10,000; KRW 168,000; KRW 10,000; KRW 2013,000; KRW 29,000 for BB Savings Bank on November 10, 2014; KRW 29,509,000; KRW 290,509,294,29400.20.

D. From April 30, 2015 to June 8, 2015, the head of the ○○ Tax Office conducted an integrated investigation of corporate tax with respect to BB savings banks, and then notified the Plaintiff and BB savings banks of the total amount of KRW 627,374,959 and recognized interest KRW 66,314,803 in deductible expenses. On July 1, 2015, on the ground that the above amount was reverted to the Plaintiff due to the outflow of the company from the company, the head of the ○○ Tax Office excluded the deductible expenses, and disposed of the amount as bonus for the Plaintiff (hereinafter referred to as “the instant income disposition”). Meanwhile, on the other hand, on the other hand, on the basis that the amount was reverted to the Plaintiff (hereinafter referred to as “the instant change notification of income amount”). The details are as follows: (1) The Plaintiff and BB savings bank notified the change of income amount (hereinafter referred to as “the change notification”).

[Attachment 1] Details of the instant income amount

(unit: won)

Details of processing expenses

208

209

Total

A certified judicial scrivener’s bonus paid to MamM (related to No.4 Crimes)

39,600,000

39,600,000

(n) Retirement pay to both J(n)(n)

45,000,000

45,000,000

Charges paid to N for management by proxy (hereinafter referred to as "crimes").

7,222,027

86,664,334

93,886,361

Total

91,822,027

86,664,334

178,486,361

E. Around August 2015, the Plaintiff filed a revised global income tax return for the global income amount in 2008 and 2009, including the instant income amount, to the Defendant. Around that time, the Plaintiff paid 000 won global income tax (=00 won for the year 2008 +00 won for the year 2009).

F. Since September 2015, the Plaintiff filed a claim for refund by reducing or correcting KRW 000 of the global income tax for the year 2008 and the global income tax for the year 2009, on the ground that the “return of the payment of labor cost by false advisory contract to the Defendant” (hereinafter “instant disposition”). However, on November 25, 2015, the Defendant issued a notice of refusal to do so (hereinafter “instant disposition”).

[Reasons for Recognition] Unsatisfy, entry in Gap evidence 1 to 11 (including each number in the case of additional number), the purport of the whole pleadings

2. Related statutes;

It is as shown in the attached Table related statutes.

3. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The exclusion period for imposition of ten years, stipulated in the latter part of Article 26-2(1)1 of the Framework Act on National Taxes, amended by Act No. 11124, Dec. 31, 2011, shall not apply to the instant case, for which the income tax liability becomes extinct before the exclusion period for imposition expires. In such a case, deeming the said amendment provision to be applied is unconstitutional contrary to the principle of statutory non-payment.

With respect to each global income tax that reverts to the Plaintiff in 2008 and 2009, the five-year exclusion period shall apply pursuant to Article 26-2(1)3 of the Framework Act on National Taxes. The global income tax liability accrued in 2008 shall be June 1, 2014, which was five years from June 1, 2009, the initial date of the exclusion period of imposition, and the global income tax liability accrued in 2009, was extinguished on June 1, 2015, which was five years from June 1, 2015, which was the initial date of the exclusion period of imposition. The notice of the change in the amount of income was issued on July 1, 2015, which was five years after the exclusion period of imposition expires. Accordingly, the Plaintiff’s instant disposition rejecting the Plaintiff’s request for reduction of the global income tax accrued in 208 and 2009 is unlawful.

Referencely, the Plaintiff had already returned the instant embezzlement, including the instant income, to BB Savings Bank before the disposition of income was taken. As such, the instant income does not actually retain the instant income and does not control and manage it. Therefore, the instant income amount ought to be excluded from the income tax imposed on the Plaintiff. Thus, the instant disposition rejecting the Plaintiff’s request for reduction and correction is unlawful.

B. Determination

(1) Article 26-2(1)1 of the Framework Act on National Taxes provides that "where a taxpayer evades a national tax, obtains a refund or deduction by fraudulent or other unlawful means, it shall be ten years from the date on which the national tax can be imposed." In addition, Article 26-2(1)1 of the Addenda to the Framework Act on National Taxes provides that "where a taxpayer evades a national tax, obtains a refund or deduction by unlawful means, it shall be ten years from the date on which the income tax or corporate tax can be imposed on the amount disposed of under Article 67 (Disposition of Income) of the Corporate Tax Act, if the national tax is evaded, refunded, or deducted by unlawful means." In addition, Article 2(1)1 of the Addenda to the Framework Act on National Taxes provides that "the latter part of Article 26-2(1) of the Corporate Tax Act (amended by Act No. 11124, Dec. 1, 2012) shall apply to the first amount to be disposed of pursuant to Article 67 of the Corporate Tax Act."

The principle of non-sufficiency in tax statutes or the principle of prohibition of retroactive taxation means that, in cases where any enactment or amendment of tax statutes, or any interpretation or any amendment of the guidelines by the tax authorities for the interpretation or management of the statutes, the relevant statutes cannot be applied to the facts of taxation requirements that are closed before the validity thereof. It does not restrict the application of new statutes, etc. to the facts of taxation requirements that have been pending before or after the lapse of the guidelines (see, e.g., Supreme Court Decision 2008Du2736, Oct. 29, 2009).

The Plaintiff’s liability to pay global income tax for the tax years 2008 and 2009 falls under the so-called “unjustifiable retroactive legislation” that applies to the Plaintiff’s global income tax for tax years 2008 and 2009 and June 1, 2010. Thus, since the starting date of the exclusion period of imposition falls under the latter part of Article 26-2(1)1 of the amended Framework Act on National Taxes (hereinafter “the latter part of Article 26-2(1)1 of the Framework Act on National Taxes”) and the five-year exclusion period of imposition has not expired as of January 1, 2012 when the latter part of Article 26-2(1)1 of the amended Framework Act on National Taxes entered into force, the latter part of the latter part of Article 26-2(1)1 of the amended Framework Act on National Taxes (hereinafter “the latter part of Article 26-2(1) has not been accepted against the principle of trust protection that the latter part of the latter part of Article 2008 and the latter part of the Act shall not be accepted.

"Fraud and other unlawful acts" under Article 26-2(1)1 of the Framework Act on National Taxes refers to deceptive or other active acts that make it impossible or considerably difficult to impose and collect taxes, and it does not constitute merely failing to file a tax return or filing a false tax return without accompanying any other acts, but in addition to the circumstances showing active concealment, such as not filing a tax return or underreporting, but intentionally failing to enter revenues or sales, etc. in the account book, it may be deemed that the imposition and collection of taxes are impossible or remarkably difficult (see, e.g., Supreme Court Decision 2014Du2522, Sept. 15, 2015).

In full view of the purport of the argument in Gap evidence No. 4, the plaintiff entered into a false judicial scrivener commission contract related to the income amount of this case with leM, received tax invoices for 39,600,000 won processed, and fraudulently appropriated them for the expenses of the BB savings bank. 5,000 won out of retirement consolation benefits related to the crime were processed as the expenses of the BB savings bank. 6,106,640 won received tax invoices with 16,00 won or more from NAN in relation to the crime and appropriated 16,00,000 won as the expense of the BB savings bank. Thus, it is recognized that the plaintiff evaded corporate tax of the BB savings bank by 100 years after the lapse of the exclusion period of imposition for global income income of 208,000 years and 20 years after the lapse of the exclusion period of imposition for taxation of 100 years since 200 years and 200 years after the expiration of the exclusion period of imposition for taxation of 200 years.

Article 2(1) of the Criminal Procedure Act provides that “The act of appropriating funds of a juristic person, such as embezzlement by the representative director or the actual manager, etc. of a juristic person, shall not be conducted on the basis of the initial recovery of difficulties, and thus constitutes the outflow from the company as an expenditure itself, and once the income tax liability is established on the portion belonging to the representative director or the actual manager, etc. of the outflow from the company, even if the person to whom the income tax liability is established later reverts to the juristic person, it shall not affect the tax liability already accrued (see, e.g., Supreme Court en banc Decision 99Du3324, Sept. 14, 201).” Although the Plaintiff cited the Supreme Court en banc Decision 2014Du5514, Jul. 16, 2015 as the grounds for its assertion, it is difficult to apply this case as it is, even if the BB savings bank received the amount equivalent to the embezzlement funds of this case, including the instant income, it cannot be deemed unlawful for the Plaintiff’s rejection of the instant disposition.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Related Acts and subordinate statutes

【National Tax Basic Act

Article 26 (Extinguishment of Liability for Payment)

The liability to pay national taxes, surcharges, or expenses for disposition on default shall be extinguished in any of the following cases:

1. When the payment, appropriation, or imposition is revoked;

2. Where the period in which a national tax may be assessed under Article 26-2 expires without any assessment;

3. When an extinctive prescription of right to the collection of national tax is completed under Article 27.

Article 26-2 (Period for Excluding Assessment of National Taxes)

(1) No national tax may be levied after the period prescribed in the following subparagraphs expires: Provided, That where a mutual agreement procedure is in progress in accordance with the treaty for the prevention of double taxation (hereinafter referred to as "tax treaty"), Article 25 of the Adjustment of International Taxes Act shall apply:

1. Where a taxpayer evades a national tax, or obtains a refund or deduction by fraudulent or other unlawful means prescribed by Presidential Decree (hereinafter referred to as "illegal acts"), it shall be for ten years from the date on which the national tax is assessable [for 15 years from the date on which the national tax is evaded, refunded or deducted by illegal acts prescribed in Article 2 (1) 1 of the Adjustment of International Taxes Act (hereinafter referred to as "international trade"). In such cases, where the national tax is evaded, refunded or deducted by illegal acts, 15 years from the date on which the income tax or corporate tax on the amount disposed of pursuant to Article 67 of the Corporate Tax Act is assessable (for 15 years from the date on which the income tax or corporate tax is imposed on the amount disposed of pursuant to Article 67 of the Corporate Tax Act after being refunded or deducted by illegal acts in international trade);

1-2. Omitted;

2. Where a taxpayer fails to file a tax base return by the statutory due date of return, for seven years from the date on which the national tax is assessable;

3. If a taxpayer does not fall under subparagraphs 1, 1-2 and 2, it shall be for five years from the date on which the national tax is assessable;

Addenda Act No. 11124, Dec. 31, 2011

Article 2. (Application Period for Excluding Assessment of National Taxes)

(1) The amended provisions of the latter part of Article 26-2 (1) 1 shall apply from the amount disposed of under Article 67 of the Corporate Tax Act for the first time after January 1, 2012.

(2) The amended provisions of Article 26-2 (2) shall apply from January 1, 2012 to the first application for correction or recommendation for adjustment.

m. Corporate Tax Act

Article 67 (Disposal of Income)

When filing a report on the corporate tax base on the income for each business year pursuant to Article 60 or determining or revising the corporate tax base pursuant to Article 66 or 69, the amount included in the calculation of earnings shall be disposed of to the person to whom it belongs, as prescribed by Presidential Decree, such as bonus, dividends, other external outflow and internal reservation.