Where a person who first becomes an oligopolistic stockholder due to the establishment, etc. of a corporation acquires stocks of another stockholder, the effect of Article 78 (1) of the Enforcement Decree of the former Local Tax Act, which stipulates that acquisition tax shall be imposed on the stocks owned by the oligopolistic stockholder by deeming that

Articles 11(4) and 105(6) of the former Local Tax Act (amended by Act No. 5406 of Aug. 30, 1997) provide that an oligopolistic stockholder shall be deemed to have acquired the assets, etc. of the corporation and impose acquisition tax only when he/she acquires the stocks or shares of the corporation from a stockholder or employee, i.e., acquires the stocks or shares of the corporation from a stockholder or employee. Although Article 78(1) of the former Local Tax Act (amended by Presidential Decree No. 15489 of Oct. 1, 1997) does not provide that an oligopolistic stockholder shall be deemed to have acquired the assets, etc. of the corporation and impose acquisition tax even when he/she acquires the stocks or shares of the corporation due to the incorporation or capital increase of the corporation, the former Local Tax Act (amended by Presidential Decree No. 15489 of Oct. 1, 197) provides that an oligopolistic stockholder shall be deemed to have acquired all the stocks or shares owned by the oligopolistic stockholder as of the date of succession acquisition.

Articles 105(6) and 111(4) of the former Local Tax Act (amended by Act No. 5406 of Aug. 30, 1997); Article 78(1) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15489 of Oct. 1, 1997)

Supreme Court Decision 79Nu257 delivered on February 12, 1980 (Gong1980, 12632) and Supreme Court Decision 94Nu4356 delivered on May 12, 1995 (Gong195Sang, 2138)

Park Ho-ero

vice-markets

1. The part of the Defendant’s imposition disposition of acquisition tax of KRW 13,160,350 against the Plaintiff on February 12, 1998, which exceeds KRW 7,650, and KRW 1,206,350, which exceeds KRW 700, among the imposition disposition of KRW 1,206,350, shall be revoked.

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

The same shall apply to the order.

1. Details of the instant disposition;

The following facts are not disputed between the parties, or they can be acknowledged in full view of the whole purport of the pleadings in the descriptions of Gap evidence 1 through 3, Gap evidence 4 and 5-1, 2, Eul evidence 2-1, 2, and Eul evidence 7-1 through 12, and there is no counter-proof otherwise.

A. On November 1, 1993, the Plaintiff engaged in the business of manufacturing the automation equipment with the trade name called genomic electric power plant at the location of 119-4, Sincheon-gu, Seocheon-gu, Seocheon-si, and on November 1, 1993, the Plaintiff established the Non-party Sungsung-gu Co., Ltd. (hereinafter referred to as the “non-party Co., Ltd.”) by investing in kind the assets of the business prior to the aforementioned gen

B. From December 17, 1993, the representative director of the non-party company, owned 172,00 shares issued by the non-party company; 171,663 shares of the non-party company; 87 shares of the non-party company's spouse; and 50 shares of the non-party Kim Yong-sik, the plaintiff's wife; 171,80 shares of the total shares issued by the non-party company (172,00 shares of the non-party company's total shares of 172,00 shares issued by the non-party company; 50 shares of the non-party company's shares of the non-party company; and 171,80 shares of the non-party company's shares of the non-party company's shares of the non-party company's shares of the non-party company's 190 shares of the non-party company's shares of the non-party company's shares of the non-party company's 190 shares of the non-party company's shares.

C. On February 12, 1998, the head of Sincheon-si, Non-party 1, the head of Sincheon-si, upon acquiring 50 shares from the above Kim Jong-si and Kim Yong-si, which had a special relation with the plaintiff's relatives or others, became an oligopolistic shareholder under Article 22 subparagraph 2 of the Local Tax Act (amended by Act No. 5406 of Aug. 30, 1997; hereinafter the same shall apply), and upon applying Articles 105 (6) and 111 (4) of the former Local Tax Act, Article 78 (1) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 15489 of Oct. 1, 1997; hereinafter the former Enforcement Decree), the plaintiff calculated the tax base of the non-party company's real estate as the total value on the account book by adding the tax base of the non-party company's real estate to 30,677,385 won, 1984.

D. Meanwhile, as a result of the enforcement of the amendment of the Ordinance on the Establishment of the Incheon Metropolitan Government Administrative Organization from October 10, 1998, the authority for the imposition and collection of local taxes and the disposition on default, which was previously delegated to the head of Bupyeong-si Office before the enforcement of the said Ordinance, belonged to the defendant, the disposition on imposition of local taxes and other acts performed by the head of Seocheon-si prior to the enforcement of the said Ordinance were considered to be other acts committed by the defendant.

2. Whether the instant disposition is lawful

A. The parties' assertion

The defendant asserts that the disposition of this case is lawful on the grounds of the above disposition and the provisions of related Acts and subordinate statutes. In full view of each provision of Articles 105(6) and 111(4) of the former Local Tax Act, the plaintiff asserted that the disposition of this case is unlawful, and that the part on which acquisition tax, etc. is imposed on the acquisition of stocks owned by the oligopolistic shareholder at the date of acquisition is unlawful on the ground that the person who first becomes an oligopolistic shareholder due to the establishment of the corporation acquires the stocks owned by another shareholder, although Article 78(1) of the former Enforcement Decree, which is its subordinate laws and regulations, shall be deemed to have acquired all the stocks owned by the oligopolistic shareholder on the date of acquisition, and thus, Article 78(1) of the former Enforcement Decree, which is its subordinate laws and regulations, shall be deemed to have extended the obligation to pay acquisition tax to the oligopolistic

B. Relevant statutes

Article 105 (6) of the former Local Tax Act provides that the oligopolistic stockholder shall be deemed to have acquired the real estate, vehicle, construction machinery, standing timber, aircraft, vessel, mining right, fishery right, golf membership right, condominium membership right, or the right to use athletic facilities complex by acquiring the stocks or equity shares of a juristic person from the stockholders or members of the juristic person and thereby becomes an oligopolistic stockholder under Article 2 subparagraph 2 of the same Article. Article 111 (4) of the same Act provides that the tax base for the real estate, vehicle, construction machinery, aircraft, vessel, mining right, fishing right, condominium membership right, or the right to use athletic facilities complex of the juristic person shall be that the oligopolistic stockholder has acquired the stocks or equity shares acquired by the oligopolistic stockholder under Article 105 (6) of the same Act.

Meanwhile, Article 78(1) of the former Enforcement Decree provides that where a person who first becomes an oligopolistic stockholder due to the establishment of a corporation or the increase of its capital, etc. acquires all the stocks or shares of a corporation owned by an oligopolistic stockholder on the date of acquisition, the acquisition tax shall be imposed pursuant to Article 111(4) of the Act, deeming that the person shall have acquired all the stocks or shares of the corporation owned by the oligopolistic stockholder on the date of acquisition. Article 78(2) of the former Enforcement Decree provides that where the ratio of stocks or shares held by the oligopolistic stockholder to the total stocks or shares of the relevant corporation (hereinafter “ratio of stocks or shares”) to the total stocks or shares of the relevant corporation is increased by the ratio of stocks or shares held by the oligopolistic stockholder to the total stocks or shares of the relevant corporation as at the time of becoming an oligopolistic stockholder, such increased

(c) Markets:

Articles 111(4) and 105(6) of the former Local Tax Act provide that where stocks or equity shares of a corporation are acquired by succession from a stockholder or employee, that is, acquisition by an oligopolistic stockholder shall be deemed to have acquired the assets, etc. of the corporation and impose acquisition tax. The same does not apply to cases where stocks are acquired by an oligopolistic stockholder due to the establishment of a corporation or the increase in capital, etc. of the corporation, the oligopolistic stockholder shall be deemed to have acquired the assets, etc. of the corporation and the acquisition tax shall be imposed (see Supreme Court Decision 94Nu43

Nevertheless, Article 78(1) of the former Enforcement Decree of the Local Tax Act provides that acquisition tax shall be imposed on the oligopolistic shareholder by deeming that the oligopolistic shareholder has acquired all of the stocks or shares owned by the oligopolistic shareholder as of the date of acquisition by succession in excess of the acquisition by succession in cases where the oligopolistic shareholder succeeds to the stocks or shares of the corporation from the time of the incorporation of the corporation without the delegation of the former Local Tax Act. This is an extension of the tax liability of oligopolistic shareholder on whom acquisition tax is imposed without any delegation of the former Local Tax Act, and thus null and void

Therefore, among the disposition of this case, the part of imposing acquisition tax, etc. by applying the provision of Article 78(1) of the former Enforcement Decree which is null and void for the acquisition of stocks owned by the non-party company from the time

(d) Tax amount not disputed;

Since the Plaintiff does not dispute the part of the disposition of this case regarding the acquisition by succession from the above 3rd party company's shareholders, the acquisition tax amount for that part shall be calculated according to Article 111 (4) of the former Local Tax Act. The acquisition tax amount shall be calculated by dividing the total value of 548,67,385 won on the land of the non-party company and the account books of the building by 172,000 and multiplying the above total number of issued stocks by 100,000, and the tax base thereof shall be calculated by multiplying the above 318,998 won by 312 (1) of the same Act. The tax amount shall be calculated by applying the tax rate of 6,379 won (gold 318,98 won x 20/1000, less than 700 won) x 160,770,740,767,79,770 and 167,000 won (gold 67,7, 167,17,067,067)

3. Conclusion

Therefore, since the part of the disposition of this case exceeding the tax amount not disputed earlier is unlawful, the plaintiff's claim of this case seeking its revocation is justified, and the costs of lawsuit are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Judges Lee Jong-soo (Presiding Judge)