Cho High Court Decision 2008west0686 (2008.04)

Special cases concerning appraisal of stocks held by the largest shareholder of small and medium enterprises when calculating the market price of unlisted stocks due to a corporation wrongful calculation;

In the case of the market price evaluation of unlisted stocks under the Inheritance Tax and Gift Tax Act, the stocks held by the largest stockholder of the small and medium enterprise shall not be subject to the evaluation of premium under the Restriction of Special Taxation Act; however, when the market price of unlisted stocks is calculated according to the rejection of wrongful calculation under the Corporate Tax Act,

The contents of the decision shall be the same as attached.

Article 15 (Good Faith and Fidelity of Framework Act on National Taxes)

Article 15 (Scope of Gross Income)

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 99,478,210 of corporate tax for the year 2005 against the Plaintiff on December 12, 2007 is revoked.

1. Details of the disposition;

The following facts shall not be disputed between the parties, and may be recognized by comprehensively taking into account the respective descriptions of Gap evidence 1, 2, Eul evidence 1, and 2 and the whole purport of pleadings:

A. On April 18, 2005, the Plaintiff, the representative director of the Plaintiff, calculated the acquisition price per share of 39,200 non-listed shares of the ○○○ consortium Co., Ltd. (hereinafter “non-party company”) at KRW 365,075, and purchased KRW 14.3 billion for acquisition price.

B. On the other hand, the defendant evaluated the market price of the shares of this case as 386,581 won per share assessed under Article 52 (4) of the Corporate Tax Act, Article 89 (2) 2 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19891 of Feb. 28, 2007), and Article 63 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007; hereinafter the same) 44,568 won per share according to the supplementary evaluation method under Article 54 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 18989 of Dec. 31, 2007; hereinafter the former Enforcement Decree of the Inheritance Tax and Gift Tax Act), and evaluated as 15/100 of the total number of shares issued at the time of sale of the shares, and Article 63 (1) 50/100 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act

The Plaintiff purchased the instant shares from thisA in KRW 365,075 per share from an individual who is a specially related person under Article 52(1) of the Corporate Tax Act, deeming that the purchase of securities constitutes a case where the Plaintiff purchased the securities at a price below the market price pursuant to Article 15(2)1 of the Corporate Tax Act, and that the difference between the price of the instant shares calculated at KRW 444,568 per share and the purchase price of the instant shares calculated at KRW 365,075 per share pursuant to Article 15(2)1 of the Corporate Tax Act, and the difference between the price of the instant shares and the purchase price of the instant shares, which is calculated at KRW 3,116,125,60 per share, [(44,568 won - 365

C. The Plaintiff, who was dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal on February 4, 2008, but was dismissed on August 4, 2008.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) In applying Article 100-2 of the former Restriction of Special Taxation Act (amended by Presidential Decree No. 8146 of Dec. 30, 2006), the special provisions of Article 63 (3) of the former Restriction of Special Taxation Act (amended by Presidential Decree No. 8146 of Dec. 30, 2006) (hereinafter “the special provisions of this case”) stipulate that the provisions of Article 63 (3) of the former Inheritance Tax and Gift Tax Act shall not apply to cases where stocks of the largest shareholder, etc. of a small or medium enterprise are inherited or donated. However, in light of the purport and purpose of the provision, it is reasonable to apply the above special provisions to cases where stocks of the largest shareholder, etc. of a small or medium enterprise are transferred” (Article 176 of the Enforcement Decree of the Income Tax Act amended by Presidential Decree No. 19327 of Feb. 9, 2006).

(2) In the process of acquiring the shares of the non-party company held by thisA, the Plaintiff: (a) entrusted the employees of the National Tax Service Center to provide advice on tax issues to B; and (b) entrusted the reliance on the oral answer of the staff of the National Tax Service and the National Tax Service’s established rules (written 4-467, March 30, 2005), thereby assessing the value per share of the shares of this case as KRW 365,075 according to the supplementary method of assessment under the Inheritance Tax and Gift Tax Act, without conducting the evaluation of the premium under Article 63(3) of the former Inheritance Tax and Gift Tax Act; and (c) subsequently, the aforementioned oral answer and the National Tax Service’s established rules are an authoritative statement of public opinion given by the Defendant; and (c) subsequently, the Defendant’s reversal of the above public opinion list and the value per share of the shares of this case unfavorable to the Plaintiff, thereby violating Article 63(1)1 (c) of the former Inheritance Tax and Gift Tax Act and Article 54 of the former Enforcement Decree of the Inheritance Tax Act.

(3) Since the tax authority trusted the public inspection statement of the Plaintiff that the Plaintiff does not have the burden of proof assessment and assessed the market price of the instant shares, the penalty tax portion in the disposition of this case is unlawful on the ground that there is a justifiable ground that it is not attributable to the Plaintiff’s duty of payment.

(b) Related statutes;

Article 15 (Good Faith and Fidelity of Framework Act on National Taxes)

Article 15 (Scope of Gross Income)

C. Determination

(1) Whether the special provision on taxation of increase in the market price of the instant shares is applied

Article 15(2)1 of the Corporate Tax Act provides that where securities are purchased from an individual who is a person with a special relationship under Article 52(1) of the Corporate Tax Act at a price below the market price under Article 52(2) of the Corporate Tax Act, the amount equivalent to the difference between the market price and the relevant purchase price shall be deemed as earnings. Article 52(4) of the Corporate Tax Act and Article 98(2) of the former Enforcement Decree of the Corporate Tax Act provides that where the market price is unclear as non-listed stocks that are not listed on the Stock Exchange as in the instant shares, the amount assessed pursuant to the supplementary assessment method stipulated in Article 63 of the former Inheritance Tax and Gift Tax Act shall be deemed as market price. Article 63(1)1(c) of the former Inheritance Tax and Gift Tax Act and Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provide that the special taxation method for non-listed stocks shall be applied to 200/300 of the former Inheritance Tax and Gift Tax Act with the largest shareholder’s capacity newly established or revised 20.

In light of the principle of no taxation without the law, the interpretation of tax laws and regulations shall be interpreted in accordance with the law, barring any special circumstance, and it shall not be permitted to expand or analogically interpret it without reasonable grounds (see, e.g., Supreme Court Decision 97Nu4173, Oct. 24, 1997). In particular, it would be consistent with the principle of fair taxation with the principle of fair taxation to strictly interpret that it may be clearly viewed as preferential provisions among the requirements for reduction and exemption (see, e.g., Supreme Court Decision 97Nu2090, Mar. 27, 1998). Therefore, the special provisions of the Restriction of Special Taxation Act, which provide that the special provisions of this case, which provide that the special provisions of the Restriction of Special Taxation Act, which provide that the special provisions of this case shall apply to cases where a corporation purchases stocks of the largest shareholder,

In addition, as the Enforcement Decree of the Income Tax Act was amended by Presidential Decree No. 19327 on February 9, 2006, Article 167(5) is applied mutatis mutandis to the provisions of Article 101(former Article 100-2) of the Restriction of Special Taxation Act, and Article 167(5) is deemed to be "cases of transfer". However, Article 167(5) of the Enforcement Decree of the Income Tax Act applies only to cases of calculating the market price of stocks related to the calculation of wrongful calculation of transfer income under Article 101 of the Income Tax Act, and therefore, it cannot be considered in the calculation of wrongful

Therefore, in evaluating the market price of the instant shares acquired by EA as the representative director of the Plaintiff from EA, who is a person with a special relationship under Article 87(1) of the former Enforcement Decree of the Corporate Tax Act, it is legitimate that the Plaintiff added 15/100 to the assessed value per share under Article 63(1)1(c) of the former Inheritance Tax and Gift Tax Act and Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act by applying Article 63(3)

(2) As to the assertion that it violates the principle of good faith

일반적으로 조세법률관계에서 과세관청의 행위에 대하여 신의성실의 원칙이 적용되기 위해서는, 첫째, 과세관청이 납세자에게 신뢰의 대상이 되는 공적인 견해 표명을 하여야 하고, 둘째, 납세자가 과세관청의 견해 표명이 정당하다고 신뢰한 데 대하여 납세자에게 귀책사유가 없어야 하며, 셋째, 납세자가 그 견해 표명을 신뢰하고 이에 따라 무엇인가 행위를 하여야 하고, 넷째, 과세관청이 위 견해 표명에 반하는 처분을 함으로ㅆ 납세자의 이익의 침해되는 결과가 초래되어야 할 것이며, 한편, 조세법령의 규정내용 및 행정규칙 자체는 과세관청의 공적 견해 표명에 해당하지 아니한다(대법원 2003.9.5. 선고 2001두403 판결 참조)

In this case, the response of the National Tax Service and the National Tax Service General Counseling Center (current Customer Satisfaction Center) is a method of providing administrative services, mainly for counseling workers or small-scale business operators, based on professional knowledge and experience, whose number of days is simply a simple consultation or guidance level, and the National Tax Service's established rules are merely an administrative regulation that provides the criteria for tax interpretation and enforcement guidelines within the tax authority, so the rules of the National Tax Service are merely an oral response to the National Tax Service and the rules of the administrative agency itself does not constitute a public opinion statement of the tax authority. In addition, in the case of a transfer of stocks with regard to the wrongful calculation of capital gains under Article 101 (1) of the Enforcement Decree of the Income Tax Act, the provision of this case is applied to the taxpayer in calculating capital gains from transactions with a related party under Article 98 (1) of the Income Tax Act, and thus, the provisions of this case were applied to the determination of market price under Article 15 (2) 1 of the Corporate Tax Act (2) of the Enforcement Decree of the Income Tax Act.

Therefore, the plaintiff cannot apply the principle of protecting trust to the plaintiff of this case without a public opinion expressed by an administrative agency subject to trust. Therefore, the plaintiff's above assertion is without merit.

(3) As to the assertion that there is justifiable ground as to the additional tax portion

Under the tax law, penalty taxes are administrative sanctions imposed as prescribed by the Act in cases where a taxpayer violates the duty to report and pay taxes without justifiable grounds in order to facilitate the exercise of the right to impose taxes and the realization of tax claims. It is not reasonable for the taxpayer to be aware of such duty. If there are circumstances under which the taxpayer can reasonably present his or her duty, or there are circumstances where it is unreasonable for the taxpayer to expect the performance of his or her duty to do so, and there is no justifiable reason to believe that it is unreasonable for the taxpayer to do so, and even if the Plaintiff acquired the stocks of this case by assessing the market price of the stocks of this case without the oral response of the National Tax Center and the National Tax Service's established rules and regulations as alleged by the Plaintiff, it is difficult to view that the Plaintiff’s under-reported report of corporate tax in relation to the transfer transaction of stocks of this case was based on the erroneous interpretation that the Plaintiff is subject to the application of the National Tax Center’s oral response and the National Tax Service’s established rules and regulations, and thus, the Plaintiff’s assertion on this part of this case also has merit.

Conclusion

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