Cho Jae-2012-Seoul Office-4035 ( December 27, 2012)

The representative of a corporation subject to the disposition of bonus must be strictly interpreted.

The taxation on the omission of sale is legitimate, but the representative director is not the representative director on the corporate register and the disposition on the omission of sale is illegal.

Article 106 (Disposition of Income)

2013Guhap52193 Revocation of Disposition of Imposition of Corporate Tax, etc.

○○ Co., Ltd.

1. ○ director of the tax office;

2. △△ Director;

January 8, 2014

February 7, 2014

1. On July 23, 2012, the Commissioner of the Regional Tax Office of △△ Regional Tax Office revokes the notification of changes in the amount of income as stated in the attached Table 2 that the Plaintiff made.

2. The plaintiff's claim against the defendant ○○ director is dismissed.

3. Of the costs of lawsuit, the part arising between the Plaintiff and Defendant ○○ Head of the Tax Office is assessed against the Plaintiff, and the part arising between the Plaintiff and Defendant △△ Head

Cheong-gu Office

The judgment of the head of the tax office and the judgment of the head of the tax office on August 1, 2012 that each disposition of corporate tax and value-added tax listed in the attached Table 1 against the plaintiff on August 1, 2012 shall be revoked.

1. Details of the disposition;

A. As a result of the tax investigation conducted on the Plaintiff from February 7, 2012 to June 8, 2012, the Commissioner of the Regional Tax Office of △△△△, the Plaintiff: (a) sold pre-paid cards and e-coophones to the PC room in the business year from 2009 to 2010; (b) failed to report the sales amount of KRW 00,000, the sum of KRW 1st January 2010, and KRW 00,000 as deductible expenses; (c) appropriated the Plaintiff’s sales amount of KRW 00,000 as deductible expenses after the closure of the Plaintiff’s office; and (d) appropriated the Plaintiff’s sales amount of KRW 1 as deductible expenses in the business year from AA system (hereinafter “A system”); and (c) appropriated the amount of KRW 00,000 as deductible expenses after the destruction of the machinery and equipment at the request of the Plaintiff; and

Details of personnel expenses in Table 1 - Omitted

B. On August 1, 2012, the head of the competent tax office imposed value-added tax on the omission of sales on August 1, 2012 according to the above investigation result, and imposed corporate tax in the calculation of corporate tax income, and non-deductible expenses such as processed expenses and tangible asset disposal losses in the calculation of corporate tax, etc. (hereinafter “instant disposition”), and on July 23, 2012, the head of the competent regional tax office of △△△△ branch office, on the premise that the Gangwon constitutes the Plaintiff’s representative, notified the changes in the amount of income, such as inclusion in the calculation of income and non-deductible expenses, on the premise that the Gangwon constitutes the Plaintiff’s representative, etc., as bonus

The imposition of corporate tax, value-added tax - omitted

Table 3 - Notification of Change in Income Amount - Omitted

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 to 3 (including all types of numbers; hereinafter the same shall apply) and the purport of the whole pleadings

2. The plaintiff's assertion

A. The sales of the aforementioned pre-paid cards and coophones constitute “CC and D” in charge of sales of pre-paid cards, etc. through commission contracts rather than the Plaintiff. Thus, the Defendants’ disposition was unlawful due to omission in sales. Even if the omission in sales belongs to the Plaintiff, the amount used for purchasing cyber money from cyber exchange should be recognized as losses (hereinafter “instant Chapter 1”).

B. On July 10, 2010, the Plaintiff terminated the office lease agreement and returned the deposit, but even after the termination of the lease agreement, the Plaintiff’s employees continued to work in the form of home-based work, and thus, this part cannot be deemed as the processed wage (hereinafter “the second Chapter”).

C. The Plaintiff concluded the EE system development agreement at the office of the AA system and invested development costs and equipment purchase costs. After the completion of development, the AA system agreed to pay security costs of KRW 11 million per month to the Plaintiff in the event of success after the AA system’s compliance games. Therefore, the loss of disposal and research and development costs of ITS equipment related to the development of the said bypass program constitutes the Plaintiff’s expense (hereinafter “third Chapter”).

D. The strongB holds 10,000 shares of the Plaintiff, but it cannot be readily concluded as a real operator. Even if a person is a actual household operator, he/she has to dispose of it as a dividend to the Gangwon who was not registered as an executive officer or employee of the Plaintiff, but has been disposed of as a bonus (hereinafter referred to as “Chapter 4”).

3. Relevant statutes;

The actual provisions of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 24357, Feb. 15, 2013)

§ 106. Disposal of income

(1) The amount included in the calculation of earnings under Article 67 of the Act shall be disposed of in accordance with the provisions of the following subparagraphs. The same shall also apply to non-profit domestic corporations

1. Where the amount included in the calculation of earnings has clearly leaked out of the company, the dividends, bonuses from the disposition of profits, other income, and other outflow from the company under each of the following items according to the person to whom they accrue: Provided, That where the accrual is unclear, it shall be deemed to have been reverted to the representative (where an executive who is not a minority shareholder, etc. and persons with a special relationship under Article 43 (8) holds not less than 30/100 of the total number of stocks issued or total amount of investment in the relevant corporation and actually controls the operation of the corporation, he/she shall be deemed the representative, and where there are not less than two representatives, de facto

(a) Where the person of accrual is a stockholder (not including stockholders who are officers or employees), the dividends of the person of accrual;

(b) If the person to whom it belongs is an officer or employee, the bonus to the person to whom it reverts;

(c) Where the person to whom it belongs is a corporation or an individual operating the business, other outflow from the company: Provided, That it shall be limited to where the distributed profit constitutes the income for each business year of a domestic corporation or a domestic business place of a foreign corporation under the provisions of Article 94 of the Act or the business income of a resident or a non-resident under

(d) Other income of the person to whom it reverts, in case where the person to whom it reverts is the person.

4. Determination

(a) Facts of recognition;

1) ParkF had registered the business of merchandise coupon trading business under the trade name of 00-0 00 ○○○-dong 00 00 'CC'. On February 4, 2010, ○○○-dong 00 00 - 00 - 00 - 00 - 00 - H00 - 00 - 00 - 00 - 00 - HH00 - sold Plaintiff’s pre-paid cards, etc. on the PC.

2) On September 23, 2009, the Plaintiff entered into a pre-paid card total sales contract with the Labor Relations Commission representative ofCC, and the details thereof are as follows.

A) The purpose of this contract is to determine such matters as may be necessary for the Plaintiff’s entrustment of domestic overall control and management of pre-paid cards to ParkF.

B) ParkF shall deposit KRW 000 to the Plaintiff with pre-paid card deposit.

C) ParkF shall deposit the amount of pre-paid card sales with the par value (70%) excluding the fee (30%).

D) The Plaintiff shall manage pre-paid cards provided by ParkF to settle sales proceeds of pre-paid cards and pre-paid cards owned by the Plaintiff by management number and confirm each other, and then determine the settlement amount of pre-paid cards sales proceeds.

3) The flow diagram of pre-paid cards and events cards between the Plaintiff and the Plaintiff, the PC bank and oil reservoir are as shown in annexed Forms 3 and 4.

4) The PC bank owners deposited pre-paid card sales proceeds into 00 bank under the name of the HongJJ. A total of KRW 000 from July 1, 2009 to December 30, 2009, and deposited KRW 000 on January 15, 2010.

5) 위 계좌로부터 2009. 7. 3.부터 2009. 12. 31.까지 합계 000원이 출금되었는데, ① 2009. 8. 30. 강BB 사촌동생 김KK에게 000원, ② 2009. 10. 5. 강BB 운전기사 김LL에게 000원, ③ 2009. 8. 13. 강BB 고문 변호사 민MM에게 000원, ④ 강BB의 내연녀 신PP에게 2009. 8. 14. 000원, 2009. 10. 14. 000원, ⑤ 2009. 10. 13. CC의 영업사원이었던 이QQ에게 000원, ⑥ 원고의 사무기기 임대업자에게 2009. 9. 15. 000원, 2009. 10. 15. 000원, 2009. 11. 16. 000원, ⑦ 2009. 8. 15. RR시스템, 원고, AA시스템의 회계업무를 담당하던 최SS에게 000원이 각 송금되었다.

6) After having been sentenced to a conviction of one year and six months of imprisonment (○○ District Court 2010dan000, 000 (combined) for the following criminal facts relating to the UU Game website related to the Plaintiff (○○ District Court 2010No000, Nov. 18, 2010) and the dismissal of appeal on February 24, 201 (Supreme Court 2010Do000) was sentenced respectively (Supreme Court 2010Do000).

1. Gambling places;

(a) A gambling room for the use of a W game site;

On or around September 7, 2007, the Defendants established YBp on the 9th floor of ○○○○○○○○-si’s 000-00, ○○○○○○○○○-si’s 9th floor, on the ground that YB is the representative director, and Defendant GangnamB owned 67% of ZW, and leased the server from ○○○○○○ Telecom’s name, and then leased WWW game from ○○○○○○○-dong’s 00, 00, 000, 000, 000, 000, 00, 000, 00, 00, 000, 00, 00, 00, 00, 00, 00, 00, 00, 00, 00, 00, 00, 00, 00.

The Defendants made 0% of the total amount of money for each of 0 pre-paid cards to be purchased by using 0 pre-paid cards (not directly charging game money on the above website; 1.0% of the total amount of money for pre-paid cards to be purchased by using 0 pre-paid cards; 2.0% of the total amount of money for pre-paid cards to be purchased by using 0 pre-paid cards or pre-paid cards; 3.0% of the total amount of money for pre-paid cards to be purchased by 0-paid cards or pre-paid cards; 3.0% of the total amount of money for pre-paid cards to be purchased by 0-paid cards or pre-paid cards; 3.0% of the amount of money for pre-paid cards to be purchased by 0-paid cards or pre-paid cards; and 4.0% of the amount of money for pre-paid cards to be purchased by 0-paid cards or pre-paid cards; and 3.0% of the amount of money for pre-paid games to be purchased by 5%.

From March 2008 to September 2009, the Defendants opened gambling with a view to making profits by providing gambling games in collusion with franchise operators, including YYF, EF, KimGH, and Gu JK, as the base of YP office and pre-paid card total sales office. In collusion with the aforementioned method, the Defendants opened gambling for the purpose of making profits by raising sales equivalent to 00 won in total by means of indirect charging of game money.

(b) A gambling room using a UU game site;

On April 3, 2009, the Defendants opened a "UU Game site" with the same contents as the above "W Game" by leasing a server from the "AB Telecom" to the ○○○○○○○○○-dong 00-0 office, which had been used as a pre-paid card's total office, and opened a "Pre-paid cards total office" office from the above point of time to December 22, 2009 (However, from the above point of time, from the above point of time to December 22, 2009, the Defendants conspired with 0% of the total amount of money deposited in the ○○○○○○-dong 00 ○○○○○-dong 2nd 000 ○○○-dong 00 ○○○-dong 00 ○○-dong 00 ○○ ○-dong 00 ○○ ○-dong 2nd 2nd 2009.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 2, 4, 5, Eul evidence Nos. 6 through 9, 13, and 22, and the purport of the whole pleadings

B. Determination

1) Determination as to the first proposal

A) The facts acknowledged above are as follows: ① the Plaintiff himself divided into several departments in order to legally operate the instant business, and the responsible person independently operated the instant pre-paid card total sales from February 2008, which is one of the core departments, and all of the pre-paid cards deposited in the total sales entered into cyber money purchase. As such, all the money deposited in the total sales were deemed to have been used in the Plaintiff’s operation; ② The instant disposition based on the deposit of the bank account in the name of Hong JJJ (OJ). The details of the instant payment were mainly paid pre-paid card payments from the PC owners; ③ the withdrawal details of the said account appear to have been the details of the Plaintiff’s transactions, such as remitting of KRW 200, a civil litigation agent, or the Plaintiff’s transactions, including transfer of KRW 200,000, and ④ the Plaintiff’s assertion that the Plaintiff’s account’s account was omitted, and thus, the Plaintiff’s transfer of this case’s account did not appear to have been separated in the name of the JJ account.

B) Unless there exist special circumstances, such as account books or other documentary evidence, in a case where a tax authority finds any revenue omitted in the initial return of a corporation by the method of a field investigation, it shall be deemed that the corresponding purchase cost was included in the total deductible expenses corresponding to the total revenue, unless there exist special circumstances, such as where the tax authority determined the tax base and amount of tax on the corporation’s income and found the revenue omitted in the initial return of the corporation. In such a case, if the tax authority failed to report the expenses corresponding to the omission income and wants to obtain the deduction from the omission, the taxpayer who seeks to include the expense in the deductible expenses must voluntarily assert and prove the omission (see Supreme Court Decision 2002Du2673, Nov. 27, 2003). In addition, it is difficult to recognize that the evidence submitted by the Plaintiff alone was paid

2) Determination on the second proposal

In full view of the purport of the arguments in Gap evidence 2, Eul evidence 9, 11, and 13, the plaintiff's actual operator KangB closed the plaintiff's U-game site on April 23, 2010 and established the AAA system on the ground of KimUW on May 18, 2010. GangnamB transferred all of the plaintiff's physical facilities to the AA system office after May 18, 2010. The plaintiff's representative director YM worked in the AA system from May 18, 201 to October 201. The plaintiff terminated the lease agreement on the office benefits to the lessor on July 10, 201 and received the deposit money from the lessor, and the plaintiff's payment of the deposit to the 2000 YG to the maximum amount of 00 Y paid to the plaintiff's account, the plaintiff's allegation that the 200 YG had not been paid to the 2010 YG.

3) Determination as to the third proposal

In full view of the aforementioned evidence evidence evidence evidence evidence Nos. 17 through 20, the Plaintiff and the E system entered into a joint contract for the development of a communication round program with the Plaintiff’s game program on August 4, 2010. However, the AA system entered into a defense service contract with the E system on October 1, 2010, the employees of the AA system carried out the selection and actual development of the said round program developer, and the ITS equipment was installed in the AA system office on May 18, 2010. After closing the game site operated by the Plaintiff on May 18, 2010, the KB provided the Plaintiff with the IT system and transferred all of the Plaintiff’s equipment to the Plaintiff’s facility, and the Plaintiff closed the office’s development cost after July 10, 2010, it is reasonable to view that the AA system was a lawful research and development device purchased by the Plaintiff’s defense system and its defense against the Plaintiff’s loss.

4) Determination as to Section 4

A) Article 106(1)1 proviso of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 24357, Feb. 15, 2013) provides that the upper limit on the disposal of income to the representative following the disposal of income as the representative shall not be based on the fact that such income accrued to the representative, but shall be deemed as a bonus to the representative without actual relation with the fact that a certain amount of fact which can be recognized as such act in order to prevent an unfair act under tax laws by the corporation. In such a case, the representative of the corporation subject to the disposal of bonus shall be strictly interpreted in accordance with the language and text (see, e.g., Supreme Court Decision 92Nu3120, Jul. 14, 1992). The proviso to Article 106(1)1 of the said Enforcement Decree provides that the representative shall be deemed as the representative if the ownership of the removed amount is unclear, and that the person shall not be deemed as a shareholder manager or a person who actually owns stocks or a person who is in a special relationship with the corporation’s board.

B) Since there is no evidence to deem that Gangwon was registered as the representative director on the Plaintiff’s corporate register or that it met the requirements as an officer, such as a shareholder on the above general title, Defendant △△ Director’s notice of change in the income amount that he disposed of the amount out of the company under the premise that the Gangwon Director of the Regional Tax Office constituted the Plaintiff’s representative should be revoked by unlawful means. Accordingly, this part of the Plaintiff’s assertion has

5. Conclusion

Therefore, the plaintiff's claim against the director of the regional tax office of △△ is justified, and the claim against the defendant ○○ Tax Office is dismissed as it is without merit. It is so decided as per Disposition.