early trial 2015west 1017 ( October 16, 2015)

Determination of a small or medium venture enterprise under the Restriction of Special Taxation Act shall follow Article 2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act

The determination of a small or medium venture venture enterprise under the Restriction of Special Taxation Act shall be governed by Article 2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act, and the proviso to Article 2 (4)

Tax credits for research and human resources development expenses under Article 10 of the former Restriction of Special Taxation Act for small and medium start-up enterprises, etc.

2015Guhap68574 Disposition of revocation of refusal to correct corporate tax

OOOO

O Head of tax office

15, 2016

2016.02.05

1. The plaintiff's claim is dismissed.

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

The defendant's rejection of correction of corporate tax of KRW 0,00,000 (including additional tax) for the business year 2012 against the plaintiff on October 31, 2014 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a company established on October 11, 2012 for the purpose of developing and selling software.

B. At the time of filing a corporate tax for the business year 2012, the Plaintiff filed a corporate tax by applying the provisions on reduction or exemption of the tax amount of a small or medium start-up venture enterprise under Article 6(2) of the Restriction of Special Taxation Act (amended by Act No. 11614, Jan. 1, 2013; hereinafter the same) and the provisions on the tax credit for research and human resources development expenses under Article 10(1) of the same Act. Since the Seoul Regional Tax Office exceeded the standards for the Plaintiff on July 1, 2014, the Seoul Regional Tax Office reported corporate tax by applying the tax credit related to the small or medium enterprise

C. On July 10, 2014, the Plaintiff filed a revised return on corporate tax for the business year 2012 with the Defendant that did not apply the provisions on tax reduction and exemption for the small and medium venture enterprise and the tax credit for research and human resources development expenses, and additionally paid KRW 0,000,000. After which, on September 1, 2014, the Plaintiff asserted that the Defendant paid an excessive amount of KRW 0,000,000 among corporate tax during the business year 2012, and filed a request for the correction of the amount. However, on October 31, 2014, the Defendant issued a rejection disposition against the above request for the correction (hereinafter “instant rejection disposition”). Accordingly, the Plaintiff filed a request with the Tax Tribunal on January 27, 2015, but was dismissed on April 16, 2015.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 4, and 5, the purport of the whole pleadings

2. Whether the rejection disposition of this case is legitimate

A. The plaintiff's assertion

1) Regarding reduction or exemption of a small or medium venture enterprise

According to Article 6(2) of the Restriction of Special Taxation Act and Article 5(4)1 of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 24271, Dec. 28, 2012; hereinafter the same shall apply), a venture business shall be promoted.

A venture business within 3 years from its establishment by a small or medium enterprise meeting the requirements under Article 2-2 of the Act on Special Measures for the Establishment

income tax on the income accrued from the business for a given period; or

Article 2-2 of the Act on Special Measures for the Promotion of Venture Businesses requires only a small or medium enterprise under Article 2 of the Framework Act on Small and Medium Enterprises, and Article 3(1) and [Attachment Table 1] of the Enforcement Decree of the Framework Act on Small and Medium Enterprises provides that the number of full-time workers is less than 300 in the case of publishing, film, broadcasting and telecommunications and information service businesses. The plaintiff is more than 10 full-time workers at the time of 2012 and it has been confirmed by the Korea Technology Finance Corporation. Therefore, the plaintiff constitutes a small or medium venture enterprise under Article 6(2) of the Restriction of Special Taxation Act, even though the defendant falls under a small or medium venture enterprise under Article 6(2) of the Enforcement Decree of the Restriction of Special Taxation Act, the defendant was deemed to be not a small or medium venture enterprise by applying the proviso of Article 2(1

2) As to the tax credit for research and human resources development expenses

A) Article 10 (1) 3 (b) of the Restriction of Special Taxation Act provides that "the amount calculated by multiplying the general research and human resources development expenses incurred for the pertinent taxable year by 25/100 shall be deducted from the corporate tax for the pertinent taxable year." According to Article 2 (1) 1 of the Enforcement Decree of the Restriction of Special Taxation Act, the number of employees, capital or sales to be used on a regular basis are small and medium enterprises whose size is below the standard under the provisions of the Enforcement Decree of the Framework Act on Small and Medium Enterprises for each business type."

According to the Enforcement Decree of the Framework Act on Small Enterprises, in the case of publishing, video, broadcasting and telecommunication and information service business, the number of full-time workers is less than 30,00 small and medium enterprises.

Since the number of full-time workers at the time of 2012 is less than 10, the defendant was considered to be a small-medium enterprise subject to deduction under Article 10 (1) of the Restriction of Special Taxation Act, but the defendant applied the proviso of Article 2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act and thus, the

B) Even if the proviso of Article 2(1) of the Enforcement Decree of the Restriction of Special Taxation Act applies to determining whether a company falls under a small or medium enterprise as alleged by the Defendant, the proviso of Article 2(4) of the Enforcement Rule of the Restriction of Special Taxation Act (amended by Ordinance of the Ministry of Strategy and Finance No. 309, Dec. 31, 2012; hereinafter the same) provides that "in calculating the sales of a company, the sales of the taxable year to which the date of establishment belongs shall be converted into annual sales." Thus, the method prescribed in the proviso of Article 2(4) of the Enforcement Rule of the Restriction of Special Taxation Act does not reflect the actual size of the company by mechanically converting sales of the company or the company, etc. with the characteristics of the sales

Since the defendant is unreasonably reduced, it constitutes an invalid provision. The defendant calculated sales pursuant to the proviso to Article 2(4) of the Enforcement Rule of the Restriction of Special Taxation Act, and deemed that the plaintiff is not a small and medium enterprise.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on reduction or exemption of a small or medium venture enterprise

Article 2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act shall apply to the determination of a small and medium venture enterprise in full view of the system, history, and language and text of the Restriction of Special Taxation Act.

① Article 5 through 8-3 of the Restriction of Special Taxation Act provides for "special taxation for small and medium enterprises" in Chapter II, Section 1 of the same Act, and does not provide for the definition and scope of small and medium enterprises subject to such special taxation. Meanwhile, Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act provides for "special taxation for small and medium enterprises" in Chapter II, Section 1 of the same Act, and Article 3 through Article 7-2 of the Enforcement Decree of the Restriction of Special Taxation Act provides for the scope of small and medium enterprises.

As seen above, Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act and the Enforcement Decree of the Restriction of Special Taxation Act is a general provision that sets the standards for small and medium enterprises.

(2) Tax reduction or exemption provisions for a small or medium start-up venture enterprise have been enacted and amended as follows:

§ 417 (amended by Act No. 5417, Dec. 13, 1997; hereinafter the same shall apply)

Article 4 (Inclusion of Investment Reserves in Loss)

(1) A national who runs a small or medium enterprise as prescribed by the Presidential Decree (hereinafter referred to as a "small or medium enterprise") shall include in deductible expenses

Article 6 (Reduction and Exemption for Small and Medium Enterprise Enterprises)

(1) With respect to a person who operates a small or medium enterprise falling under any of the following subparagraphs (hereinafter referred to as a “small or medium start-up enterprise”) or a business incubator under Article 16-2 of the Support for Small or Medium Enterprise Establishment Act, the tax amount equivalent to 50/100 of the income or corporate tax on any income accruing from such business shall be reduced or exempted for the taxable year including the date on which the first income accrues from such

3. Venture businesses as prescribed by the Presidential Decree, which are established in exclusive complex for venture businesses and collective complex for venture businesses under the Act on Special Measures;

former Restriction of Special Taxation Act (amended by Act No. 5584, Dec. 28, 1998; hereinafter the same shall apply)

Article 4 (Inclusion of Investment Reserves in Loss)

(1) A national who runs a small or medium enterprise prescribed by Presidential Decree (hereinafter referred to as a "small or medium enterprise") shall be included in

Article 6 (Reduction and Exemption for Small and Medium Enterprise Enterprises)

(1) For a national designated as an operator of a small or medium enterprise which falls under any of the following subparagraphs (hereinafter referred to as the “small or medium enterprise start-up enterprise”) or as an operator of a business incubator under Article 16-2 of the Support for Small or Medium Enterprise Establishment Act on or before December 31, 2003, the tax amount equivalent to 50/100 of the income tax or corporate tax on any income accruing from the business shall be reduced or exempted for the taxable year including the date on which the first income accrues from the

3. A venture business as prescribed by the Presidential Decree which starts up in an exclusive complex for venture businesses and collective complex for venture businesses under the Act on Special Measures for the Promotion

former Restriction of Special Taxation Act (amended by Act No. 5996 of Aug. 31, 1999; hereinafter the same shall apply)

Article 6 (Reduction and Exemption for Small and Medium Enterprise Enterprises)

(2) In case of a venture business under Article 2 (1) of the Act on Special Measures for the Promotion of Small and Medium Enterprises which is prescribed by the Presidential Decree and confirmed as a venture business under Article 25 of the said Act within 2 years after its establishment (hereinafter referred to as the “small and Medium Venture Enterprise”), the tax amount equivalent to 50/100 of the income tax or corporate tax on the income accruing from the said business shall be reduced or exempted for the taxable year in which the first income accrues after its establishment and for the taxable year ending within 5

As seen in the above table, at the time of the enactment of the Regulation of Tax Reduction and Exemption Act as Article 6(1)3, the said Act on the Regulation of Tax Reduction and Exemption under the premise that the small and medium start-up venture enterprise should be the small and medium enterprise under the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act, which is to be abbreviationd by Article 4 of the Regulation of Tax Reduction and Exemption Act, and the said provision on tax reduction and exemption for the small and medium start-up venture enterprise has been repealed

Article 4 of the Act on Special Cases concerning the Restriction of Special Taxation was still premised on the fact that it should be a "small or medium enterprise prescribed by the Enforcement Decree of the Restriction of Special Taxation Act". Meanwhile, the amended Special Taxation Act has abolished Article 6 (2) by limiting the scope of venture businesses eligible for tax reduction or exemption for small or medium start-up start-up enterprises in the Seoul Metropolitan Area to an exclusive complex for venture businesses or a venture business for venture businesses. In the process of the new establishment, the phrase that the small or medium start-up venture enterprise should be a small or medium enterprise prescribed by the Enforcement Decree of the Restriction of Special Taxation Act has disappeared, but in history, it seems that the small or medium start-up venture enterprise is naturally a small or medium enterprise prescribed by the Enforcement Decree of the Restriction of Special Taxation Act (it does not seem that there was any special circumstance that

③ Article 5(1) of the Restriction of Special Taxation Act provides that "the corporate tax shall be deducted from corporate tax operated by a small or medium enterprise prescribed by Presidential Decree (hereinafter referred to as "small or medium enterprise"), and Article 6(3) of the Restriction of Special Taxation Act provides that "the scope of a small or medium enterprise and a small or medium start-up venture enterprise shall be a small or medium enterprise that runs any of the following types of business," and according to the above provisions, the small or medium start-up venture enterprise provided for in Article 6(2) and (3) of the Restriction of Special Taxation Act

In addition, Article 2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act "small and medium enterprises prescribed by Presidential Decree" in Article 5 (1) of the Restriction of Special Taxation Act means crop cultivation business and public opinion poll business.

Article 5(4)1 of the Enforcement Decree of the Restriction of Special Taxation Act provides that "an enterprise that is operated as a business and meets all the requirements of the following subparagraphs (hereinafter referred to as "small or medium enterprise"), and "an enterprise prescribed by Presidential Decree" in Article 6(2) of the Enforcement Decree of the Restriction of Special Taxation Act refers to a small or medium enterprise that meets the requirements of Article 2-2 of the Act on Special Measures for the Promotion of Venture Businesses." According to the above provisions, the small or medium venture enterprise prescribed in Article 6(2) of the Restriction of Special Taxation Act and Article 5(4)1 of the Enforcement Decree of the Restriction of Special Taxation Act is based on the premise that it

Therefore, this part of the plaintiff's assertion is without merit.

2) Determination of tax credit for research and human resources development expenses

A) Determination on the first argument

In order to be subject to the special exception for small and medium enterprises under the Restriction of Special Taxation Act, the requirements of Article 2(1) of the Enforcement Decree of the Restriction of Special Taxation Act should be met.

According to the main sentence and proviso of Article 2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act, "small and medium enterprises prescribed by Presidential Decree" in Article 5 (1) of the Enforcement Decree of the Restriction of Special Taxation Act means enterprises engaged in crop cultivation business and public opinion poll business as their main business, which meet all the following requirements (Article 5 (1) 1 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises (Article 1 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises): Provided, That at least 1,000 employees ordinarily employed are at least 1,00 million won, equity capital is at least 1,00 million won, and sales amount is at least 1,00 million won, or at least 5,00 million won, it shall not be deemed small and medium enterprises, as alleged by the plaintiff, if sales amount is at least 1,00 million won as prescribed in the proviso to Article 2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act, it shall not be deemed small and medium enterprises

B) Judgment on the second argument

In light of the above facts, Article 2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act provides that "if sales are more than 100 million won in determining the scope of small and medium enterprises, it shall not be deemed small and medium enterprises." Article 2 (4) of the Enforcement Decree of the Restriction of Special Taxation Act provides that "the matters necessary for the calculation of sales shall be prescribed by Ordinance of the Ministry of Strategy and Finance." The proviso of Article 2 (4) of the Enforcement Rule of the Restriction of Special Taxation Act provides that "in calculating sales of enterprises, the annual sales of the taxable year to which the date of establishment belongs shall be converted into sales." Thus, the proviso of Article 2 (4) of the Enforcement Rule of the Restriction of Special Taxation Act provides that "in calculating sales of enterprises, the annual sales of the taxable year to which the date of establishment belongs shall be converted into sales, if a taxpayer recognizes the sales of the taxable year as they are without conversion into annual sales, it is essential to limit the scope of small and medium enterprises to apply the provision of corporate tax reduction or exemption benefits to small and medium enterprises."

3. Conclusion

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

shall be ruled.