Examination-Gift-2013-0074 (Law No. 16, 2013.09)

The imposition of an unfair non-reported penalty tax rate on the tax base of gift tax on the nominal trust shares is legitimate.

In the event that the Plaintiff did not report the tax base of gift tax due to the deemed donation of title trust, the disposition that the Defendant imposed on the Plaintiff the penalty tax without filing a return by applying the rate of unfair non-declaration of taxes (40%) to the tax base of gift tax on the instant shares held in

Article 47-2 of the Framework Act on National Taxes:

2013Guhap20318 Revocation of Disposition of Imposition of Gift Tax

StateA

00. Head of tax office

December 20, 2013

February 11, 2014

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 1,200,000 as additional tax on gift tax against the Plaintiff on June 1, 2013 is revoked.

1. Details of the disposition;

A. The KimB (Death on March 10, 2010), on October 8, 2007, held the title trust of the shares of GyeongD Business Co., Ltd. with the Plaintiff on October 8, 2007.* also acquired 5,00 shares of GyeongD Business Co., Ltd. from thisCC on October 8, 2007.

B. As KimB transferred the shares of this case to * 950,00,000 won in March 27, 2009, the Plaintiff acquired the shares of this case to 1,150,000,000 won on May 31, 2010 and transferred the shares of this case to 950,000,000 won on March 27, 2009, the Plaintiff filed a final return of capital gains tax.

C. In the process of the Plaintiff’s on-site investigation of capital gains tax reverting to 2009, the Defendant: (a) deemed that the Plaintiff was not actually purchased from thisCC on October 8, 2007; and (b) deemed that the instant shares were held in title trust from KimB; and (c) deemed that the acquisition value of the instant shares was KRW 1,150,000,000 as the value of donated property, the Defendant corrected the Plaintiff’s gift tax of KRW 459,00,000 on January 12,

D. On April 5, 2011, the Plaintiff filed an objection. On July 8, 201, the director of the regional tax office of 00, the director of the regional tax office rendered a re-audit on October 8, 201, which the Defendant first imposed on the Plaintiff on the Plaintiff on January 12, 2011, that KRW 459,00,000 per share value of the instant shares as of the date of the Plaintiff’s donation re-audits the appraised value of the instant shares under the Inheritance Tax and Gift Tax Act, and then calculated the value of donated shares as of the date of the Plaintiff’s donation pursuant to the inheritance tax and Gift Tax Act, and corrected the tax base and tax amount thereof.” Accordingly, the Defendant made a re-audit, and accordingly, rendered a decision to reduce the original gift tax amount of KRW 83,229,00,000 by KRW 415,928,820.

E. On September 16, 201, the Plaintiff filed a request for re-examination, and the Commissioner of the National Tax Service filed a request for re-examination on or before September 16, 201. The Commissioner of the National Tax Service rendered a decision that the assessment of KRW 115,928,820 on October 8, 2007, which was notified to the Plaintiff on the market price of the instant shares, corrected the tax base and tax amount according to the result, and dismissed the remainder of the claim. The Defendant re-audited the market price of the instant shares, and made a decision that “the remainder of the claim is dismissed.” Accordingly, on December 22, 201, the Defendant made a re-audit and made a decision that the value per share of the instant shares was KRW 12,00,000, KRW 60,000, KRW 115,928,820, KRW 9,000 (including the additional tax on negligent return, additional tax for arrears, KRW 1,000.21.29).

F. Meanwhile, while re-auditing gift tax according to the above request for review, the Defendant applied the general non-declaration penalty tax rate (20%) with respect to the additional tax on negligent tax returns on gift tax. However, on June 1, 2013, the Defendant issued a notice of additional correction and notification of KRW 1,200,000 for the additional tax on gift tax by applying Article 47-2(2) of the former Framework Act on National Taxes (amended by Act No. 8830, Dec. 31, 2007; hereinafter the same shall apply) and Article 27(2) of the Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 22038, Feb. 18, 2010; hereinafter the same shall apply) to the Plaintiff (hereinafter “instant disposition”).

G. The Plaintiff appealed and filed a request for review on August 6, 2013, but the Commissioner of the National Tax Service dismissed the Plaintiff’s request on September 16, 2013.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 through 6, Eul evidence Nos. 1 and 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case is unlawful for the following reasons.

(1) Although title trust does not fall under the "unfair method" under Article 47-2 (2) of the former Framework Act on National Taxes, the instant disposition taken on a different premise is unlawful.

(2) The Plaintiff’s payment of the gift tax finally determined on December 29, 201 by fully paying the gift tax, which is all terminated in all cases related to the gift tax, and the imposition of additional tax is illegal because it is either a disposition on the case for which the obligation to pay has already been terminated,

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) As to the Plaintiff’s first argument

According to Article 47-2 (2) 1 of the former Framework Act on National Taxes, where there is a tax base (in cases of value-added tax, referring to the tax amount to be paid under the provisions of Articles 17 and 26 (2) of the Value-Added Tax Act; hereinafter referred to as "tax base" in this Section) without filing a tax return (in cases of value-added tax, referring to the method prescribed by the Presidential Decree that violates the duty to report the tax base or the amount of national tax on the basis of concealing or pretending all or part of the fact that serves as the basis for calculating the tax base or the amount of national tax; hereinafter referred to as "tax base" in this Section), an amount equivalent to 40/100 of the amount calculated by multiplying the calculated tax amount by the ratio of the amount of tax without filing the tax base to the amount without filing the tax base by improper means is to be added to or deducted from the amount to be paid. Article 27 (2) of the former Enforcement Decree of the Framework Act on National Taxes provides for the preparation of double books, preparation of false evidence or false documents (Article 2), false (Article 3).

According to the above facts, KimB acquired the instant shares from thisCC on October 8, 2007, and trusted them to the Plaintiff. On May 31, 2010, the Plaintiff filed a final return on capital gains tax as if it transferred the instant shares to the stock company ** on March 27, 2009, but did not file a return on the gift tax base based on the constructive gift for nominal trust. However, the Plaintiff’s failure to report on the gift tax base based on the constructive gift for nominal trust constitutes “a concealment of property” under Article 47-2(2) of the former Framework Act on National Taxes and Article 27(2)5 of the former Enforcement Decree of the Framework Act on National Taxes. Thus, the disposition of this case by the Defendant imposition of penalty tax without filing a return on the gift tax base on the instant nominal trust shares against the Plaintiff is legitimate, and the Plaintiff’s aforementioned assertion is groundless.

(2) As to the second argument of the Plaintiff

In calculating the Plaintiff’s non-reported additional tax rate (40%), the Defendant revised the erroneous application of the general non-reported additional tax rate (20%). Accordingly, the instant disposition cannot be deemed to have violated the good faith principle. The Plaintiff cannot be deemed to have paid the reduced gift tax and the additional tax, etc. calculated by applying the general non-reported additional tax rate (20%) on December 29, 201, and cannot be deemed to have fulfilled its duty to pay the gift tax on the donation of title trust to the instant shares. Furthermore, insofar as the Plaintiff did not submit a report on the gift tax on the instant shares under title trust to the head of the tax office having jurisdiction over the place of tax payment, the exclusion period for imposition of the gift tax shall be 15 years. The Plaintiff’s imposition of the additional tax on October 1, 2013, the exclusion period for imposition of the gift tax, which was within the exclusion period for imposition, is legitimate. Therefore, the Plaintiff’s imposition of this part of the instant disposition is without merit.

3. Conclusion

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