[1] The meaning of "workplace" subject to Article 22 of the Addenda of the Restriction of Special Taxation Act (amended by Act No. 6538 of Dec. 29, 2001) and whether or not to exclude a workplace designated as a temporary investment tax mutual aid project from the regulations in force at the time of investment subject to mutual aid after the enforcement of Article 130 (1) of the former Restriction of Special Taxation Act (affirmative)

[2] In a case where the chief of the competent tax office accepted a taxpayer's request for correction and decided or corrected the tax base, amount of tax, etc., but there is an error or omission, whether the disposition to correct it can be

[1] Articles 26(1), 130(1), and 130(1) of the former Restriction of Special Taxation Act (amended by Act No. 703, Dec. 30, 2003; hereinafter referred to as the “former Restriction of Special Taxation Act”) provides that the provisional tax deduction requirement of Article 130(2) of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008; hereinafter referred to as the “former Restriction of Special Taxation Act”) shall not apply to the temporary investment exemption requirement of Article 2(1), 22(1), and 30 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 25138, Dec. 29, 2001; excluding the temporary investment exemption requirement of Article 30 of the former Restriction of Special Taxation Act (amended by Presidential Decree No. 25135, Dec. 28, 201).

[2] Article 44 of the Framework Act on National Taxes and Article 66(2)1 and (4) of the Corporate Tax Act provide that even if the head of the competent district tax office, etc. corrected the tax base and amount of corporate tax due to any error or omission in the details of a domestic corporation’s return, if there is any error or omission in correction, it shall be corrected again. Meanwhile, the system of a request for correction under the Framework Act on National Taxes claims the head of the competent tax office to make a determination or correction of the tax base, amount of tax, etc. entered in the tax base return, which was originally filed within the statutory due date of return. There are differences in the subject, decision-making institution, decision-making procedure, etc. as to the administrative appeal procedure for taxation, and there are no special provisions in the Framework Act on National Taxes concerning the decision or correction of the decision-making or correction of the head of the competent tax office, the procedure of objection, examination, request for correction, etc. by accepting a taxpayer’s request for correction

[1] Articles 26(1) and 130(1) of the former Restriction of Special Taxation Act (Amended by Act No. 6538, Dec. 29, 2001); Articles 130(1) of the former Restriction of Special Taxation Act (Amended by Act No. 7003, Dec. 30, 2003); Article 130(2) of the former Restriction of Special Taxation Act (Amended by Act No. 9272, Dec. 26, 2008); Articles 2(1) and 22 of the Addenda of the Restriction of Special Taxation Act (Amended by Act No. 6538, Dec. 29, 2001); Article 23(1) of the former Enforcement Decree of the Restriction of Special Taxation Act (Amended by Presidential Decree No. 17458, Dec. 31, 201); Article 130(1) of the Enforcement Decree of the Restriction of Special Taxation Act (Amended by Presidential Decree No. 2413638, Feb. 2638, 2015, 2013)

Medical Corporation Eul District Hospital (Law Firm Squa, Attorneys Go Won-seok et al., Counsel for the defendant-appellant)

The director of the tax office

Seoul High Court Decision 2013Nu10504 decided September 27, 2013

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. As to the grounds of appeal Nos. 1 and 2

A. Article 26(1) of the former Restriction of Special Taxation Act (amended by Act No. 6538, Dec. 29, 2001; hereinafter “former Special Taxation Act”) provides that when the Government deems it necessary for business adjustment, an amount of temporary investment equivalent to a certain amount out of the “amount of investment prescribed by the Presidential Decree” shall be deducted from income tax or corporate tax for the taxable year prescribed by the Presidential Decree. Article 23(1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17458, Dec. 31, 2001) provides that “the amount of investment made by a national operating a specific business such as mining business shall be the amount of investment made to newly acquire facilities falling under the business assets prescribed by the Ordinance of the Ministry of Finance and Economy” (hereinafter “temporary investment tax amount”) is listed in the business subject to the deduction of temporary investment tax (hereinafter “temporary investment tax amount”) under the Restriction of Special Taxation Act, and Article 23(1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 13081.

In addition, Article 130(1) of the former Special Taxation Act provides that “Where a national starts up a business in the Seoul Metropolitan Area after January 1, 1990 (including where an enterprise located in an area other than the Seoul Metropolitan Area establishes a new place of business in the Seoul Metropolitan Area), Article 26 shall not apply to fixed assets for business located in the Seoul Metropolitan Area,” which provides that an investment in the business assets of mutual-aid projects for temporary investment shall be excluded from the deduction if the investment is made in the business assets of mutual-aid projects within the Seoul Metropolitan Area, but Article 130(1) of the Restriction of Special Taxation Act (amended by Act No. 6538, Dec. 29, 2001; hereinafter “amended Special Taxation Act”) enacted from January 1, 2002, provides that “Where a national starts a business by establishing a new place of business in the Seoul Metropolitan Area after January 1, 1990, or relocates the previous place of business (including a place of business established before December 31, 1989) to exclude the temporary investment scope.”

Meanwhile, Article 2(1) of the Addenda to the amended Special Assistance Act provides that "the amended provisions concerning income tax and corporate tax in this Act shall begin to apply from the taxable year beginning after this Act enters into force," and Article 22 (hereinafter "the Addenda of this case") provides that "the part concerning "workplace" in the amended provisions of Article 130(1) shall begin to apply from the first place of business after this Act enters into force and start to the first place of business or to the part where the existing place of business is relocated to another place of business."

Since then, Article 130(1) of the amended Special Assistance Act was amended by Act No. 7003 on December 30, 2003, Article 130(2) of the same Act provides that “Where a person who is not a small or medium enterprise, other than a small or medium enterprise, newly establishes a place of business in the overconcentration control region in the Seoul Metropolitan area after January 1, 1990, and establishes a new place of business, or relocates the previous place of business,” any temporary investment tax on fixed assets for business acquired to be used at a place of business located in the overconcentration control region in the Seoul Metropolitan area shall not be deducted from the amount of temporary investment after January 1, 2004 (Article 32 of the Addenda). This was maintained until the amendment by Act No. 9272, Dec. 26,

In light of the language, structure, and amendment history of these regulations, the former special law separates the requirements for deduction of temporary investment tax and its exclusion requirements from the investment in a business meeting the requirements for deduction of temporary investment tax under Articles 130(1) through 26(1), which excludes the deduction of temporary investment tax with respect to investment in the Seoul Metropolitan area. This case’s supplementary provision provides for the application of Article 130(1) of the amended special law on exclusion requirements, as the scope of exclusion is expanded more than that of the previous special law, it is only a provision that is prepared to apply the exclusion requirements of the former special law on existing temporary investment tax benefits as it is. Since the amended special law does not explicitly limit the scope of application of the special law on the temporary investment tax to the business newly added as a mutual aid project after the enforcement of the amended special law, it is reasonable to interpret the “special law on investment in the workplace” under Article 130(1) of the amended special law as the "special law on investment in the workplace designated after the enforcement of the aforementioned special law."

B. The reasoning of the first instance judgment cited by the lower court reveals the following: (a) on January 3, 1995, the Plaintiff, a medical corporation, established a Nowon-gu branch office in Seoul Special Metropolitan City, Nowon-gu ( Address omitted); (b) on the amount invested in the above hospital, the Plaintiff reported and paid the corporate tax without deducting the temporary investment tax in the business year 2005 through 2007; and (c) upon filing a request for correction, the amount equivalent to the temporary investment tax was refunded; and (d) on the business year 2008, the Plaintiff reported and paid the corporate tax by deducting the temporary investment tax; and (b) on the ground that the investment in the above hospital constitutes the case where the Plaintiff newly established a place of business in the overconcentration control region in the Seoul Metropolitan area after January 1, 1990, excluded the deduction of the temporary investment tax and imposed the corporate tax in this case on March 29, 201 and May 12, 2011.

Examining these facts in light of the aforementioned provisions and legal principles, with respect to the Nowon-gu Hospital established by the Plaintiff operating a medical business included in the temporary investment tax deduction from January 1, 2004, which was after the enforcement of Article 130(1) of the amended Special Support Act, it is not possible to determine whether to exclude the temporary investment tax deduction pursuant to Article 130(1) of the former Special Support Act by applying the instant supplementary provision, and it is not possible to determine whether to exclude the temporary investment tax deduction pursuant to the provisions in force in the business year 2005 through 2008, which was actually invested after the designation of the temporary investment tax amount as a mutual-aid business. The Nowon-gu Hospital constitutes “a place of business newly established in the overconcentration control region in the Seoul Metropolitan area after January 1, 190,” and thus, it is not possible to deduct the temporary investment tax deduction for the fixed assets acquired for the use by the

The court below is just in its conclusion that the plaintiff's investment in the Nowon-gu Hospital is subject to the exclusion of the temporary investment tax deduction by applying the supplementary provision of this case to the determination under Article 130 (1) of the former Act, but it is not possible for the plaintiff to deduct the temporary investment tax for the above investment. In so doing, the court below did not err by misapprehending the legal principles as to the interpretation of Article 130 (1) of the former Act, contrary to what is alleged in the grounds of appeal.

2. As to the third ground for appeal

A. Article 44 of the Framework Act on National Taxes and Article 66(2)1 and (4) of the Corporate Tax Act provide that even where the head of the competent district tax office, etc. corrected the tax base and amount of corporate tax due to any error or omission in the details of a return filed by a domestic corporation, if any error or omission exists, it shall be corrected again. Meanwhile, the system for filing a request for correction under the Framework Act on National Taxes claims the head of the competent tax office, who has filed a tax base return within the statutory due date of return, to determine or correct the tax base, amount of tax, etc. recorded in the tax base return. There are differences in the subject, decision-making institution, decision-making procedure, etc., which are the administrative appeals procedure for a taxation disposition, and there are no special provisions for the decision or correction of the decision-making or correction of the head of the competent tax office, and separate procedures for filing an objection, examination, request for correction, etc. against the disposition of the head of the competent tax office who rejected the

B. In the same purport, even if the Defendant accepted the Plaintiff’s claim for correction and corrected corporate tax for the business year from 2005 to 2007, it is justifiable to determine that the corporate tax disposition of this case was lawful by deeming that the rectification can be made in a case where there was an error by deducting the interim investment tax from the rectification, and contrary to what is alleged in the grounds of appeal, there were no errors of misapprehending the legal principles on the effect of

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim So-young (Presiding Justice)