Income tax on the disposition of income after January 1, 2012 shall be set period for exclusion from imposition of income tax.

If the disposition of income was made for the first time after January 1, 2012, the supplementary provisions of the amended provisions apply to the exclusion period of income tax due to bonus disposal for the corporate tax evaded.

Article 67 of the Corporate Tax Act

District Court 2018Guhap10236 global income and revocation of disposition

AA

00. Head of tax office

November 2018

October 23, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of global income tax of KRW 131,55,140 against the Plaintiff on December 7, 2016 is revoked.

1. Details of the disposition;

A. Sss Co., Ltd (the name of the company was changed from '000 to '000', and was changed to '00.8.30 on August 30, 2010; hereinafter "the company of this case") completed the registration of transfer of ownership of 1/2 shares to kk and JJ on May 29, 2008 about 00 00 m20 m200 m200 m200 m2 (hereinafter "the land of this case").

B. The instant company, on March 31, 2009, sold the instant land in KRW 300 million, and accordingly, reported corporate tax for the pertinent business year by appropriating the asset disposal profits in the business year 2008 as KRW 230,964,000.

C. As a result of the tax investigation conducted on the instant company from June 23, 2014 to August 21, 2014, the head of the ○○○○ Tax Office: (a) deemed that the instant company sold KRW 1 billion, not KRW 300,000,000,000, which is the difference, to the Plaintiff and NN; and (b) determined that each of the KRW 350,000,000,000,000,000 to the Plaintiff and NN was reverted to the company; and (c) on November 3, 2014, the head of the ○○ Tax Office issued a notice of change in the amount of income (hereinafter referred to as “the instant disposition of income”) to the effect that each of the instant company disposes of KRW 350,00,000 as a bonus for the Plaintiff and NN, including the above KRW 70,00,00 in gross income on December 2, 2014.

D. The instant company withheld income tax on bonuses from Plaintiff and N, and filed a return thereon.

On November 30, 2015, the Defendant, upon receipt of the notice of taxation data, closed the business on November 30, 2015. On December 7, 2016, the Defendant issued a decision of correction to increase the global income tax of KRW 131,55,140 for the year 2008 (hereinafter “instant disposition”).

2. Determination on the legitimacy of the instant disposition

A. The plaintiff's assertion

The Plaintiff, as an employee of the instant company, did not enter into a side agreement while selling and buying the instant land, or did not participate in the entry of false books of the instant company, and merely received a loan from the instant company, and does not constitute a case where the Plaintiff evaded national taxes due to fraud or other unlawful act. Accordingly, the period for exclusion of imposition of income tax on global income for which the Plaintiff had accrued in 2008 is five years or seven years, and the instant disposition was made after the expiration of the period for exclusion of imposition, and thus, was unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Article 26-2(1)1 of the former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201) provides that “where a taxpayer evades a national tax, obtains a refund or deduction by fraudulent or other unlawful means, it shall be ten years from the date on which the national tax can be imposed, and where a taxpayer does not fall under subparagraph 1, subparagraph 3 of the same Article, it shall be five years from the date on which the national tax can be imposed.”

However, Article 26-2(1)1 of the Framework Act on National Taxes (amended by Act No. 111124, Dec. 31, 2011; hereinafter referred to as the "amended Act") newly established a provision that "if a national tax evaded, refunded, or deducted due to an unlawful act is a corporate tax, it shall be for ten years from the date on which the income tax can be imposed on the amount disposed of pursuant to Article 67 of the Corporate Tax Act (hereinafter referred to as "the amended provision").

With respect to the application of the amended provisions, Article 2(1) of the Addenda of the Framework Act on National Taxes provides that "the amended provisions of Article 26-2(1)(1)(the latter part) shall apply from the amount disposed of under Article 67 of the Corporate Tax Act for the first time after January 1, 2012."

The above amended provisions stipulate that even if the exclusion period of corporate tax is ten years due to a corporate fraud or other unlawful act, it is difficult to deem that the representative of a corporation has been expected to receive the bonus disposal or the constructive excess disposal due to the name of the portion to be reverted even if the exclusion period of corporate tax falls under ten years, and thus, the exclusion period of imposition on global income tax due to the bonus disposal or the constructive excess disposal is five years in principle (see, e.g., Supreme Court Decisions 2007Du20959, Jan. 28, 2010; 2007Du11382, Apr. 29, 2010); and the exclusion period of imposition on the amount disposed of as bonus and dividend in relation to the corporate tax evaded by fraud or other unlawful act is set up for ten years as well as the corporate tax.

2) Although it is not allowed to regulate the past facts and legal relations, it is not allowed to do so even when the so-called quasi-appeal legislation, the object of which is that the facts are in progress at the time of the amendment or where the exclusion period is in progress (see, e.g., Supreme Court Decision 2005Du2612, Jul. 26, 2007). If the supplementary provision of the amended provision is interpreted only in accordance with the language and text, if the disposition of income under Article 67 of the Corporate Tax Act takes place after January 1, 2012, the exclusion period of imposition of income tax or corporate tax from the disposition of income may always be ten years, but as seen earlier, it is not allowed to do so, and even if the disposition of income was made after January 1, 2012, it shall not be deemed that the supplementary provision of the amended provision of the Corporate Tax Act was not applied if it had already been avoided before the exclusion period of imposition period of income tax expires (see, e.g., Supreme Court Decision 20120Du1515, Mar. 2617, etc.).

3) In light of the following facts and circumstances revealed by the purport of the evidence Nos. 7 and 8 and the entire pleadings, the exclusion period for imposition of the instant disposition shall be ten years under the latter part of Article 26(1)1 of the former Framework Act on National Taxes. Thus, the Plaintiff’s assertion that the exclusion period for imposition has lapsed is rejected.

A) Article 12-3(1)1 of the Enforcement Decree of the Framework Act on National Taxes provides that the exclusion period for national taxes, the tax base and tax amount of which are reported, shall be calculated from the date following the due date of filing a report or the due date of filing a return on the tax base and tax amount of the relevant national tax, and Article 70(1) of the Income Tax Act provides that any resident having global income in the relevant taxable period, shall report the global income tax base to the head of the district tax office having jurisdiction over the place of tax payment from May 1 to 31 of the year following the relevant taxable period, and the Plaintiff’s global income tax for 2008 years, the exclusion period for imposition, beginning on June 1, 2009, which is the day following the due date of filing the tax base and tax amount, shall proceed. Thus, the exclusion period for imposition has not elapsed five years

B) In addition, “income disposition first taken after January 1, 2012” stipulated in the supplementary provisions of the amended provisions refers to 10 years of the total exclusion period uniformly when the first disposition of income is made after January 1, 2012 on or after the enforcement date of the amended provisions. Thus, in cases where the disposition of income was made after January 1, 2012, the supplementary provisions of the amended provisions shall apply, and the exclusion period for imposition shall be 10 years (see, e.g., Supreme Court Decision 2017Du69120, Feb. 28, 2018). The instant disposition is imposed by the Defendant on the instant recognized income disposition on or after November 3, 2014, which is subject to the amendment provisions of the amended provisions.

C) In selling the instant land, the instant company separately prepared a sales contract, unlike the sales contract, in which the sales price was KRW 300 million, stating the sales price as KRW 1 billion. The sales contract, in which the said sales price was KRW 300 million, appears to be a false sales contract, and the instant company prepared a book on the premise that the sales price was KRW 300 million, and accordingly reported and paid corporate tax accordingly. As such, the act of evading corporate tax, etc. is an active act that makes it impossible or considerably difficult to impose and collect tax impossible or difficult. Accordingly, the instant company may be deemed to evade national tax due to the “Fraud or other unlawful act” as stipulated in Article 26-2(1)1 of the Framework Act on National Taxes, and as to the notice of change in the amount of income disposed of as a bonus in relation to the corporate tax evaded, the exclusion period for imposition of 10 years shall apply in accordance with the amended provisions.

3. Conclusion

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

(c)