Seoul Administrative Court 2009Guhap34945 ( October 08, 2010)

Seocho 2009 Swiss0485 (Law No. 26 May 26, 2009)

An individual church which is not registered with the competent authority shall not include the reserve fund for essential business in its deductible expenses.

It seems due to the taxation policy decision that allows the registration organization to include the reserve fund for essential business in deductible expenses, limited to the reserve fund for essential business under inspection and supervision by the competent authority (Article 37 of the Civil Act), and the individual church which is not registered with the competent authority shall not include the reserve fund for essential business in deductible expenses.

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition of imposition of KRW 138,99,530 of the corporate tax for the business year of 2007 against the plaintiff on August 8, 2008.

The reasoning for the court's reasoning for this case is that "a religious organization is not registered with the competent authority under Article 36 (1) 1 (e) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 21302 of Feb. 4, 2009) except for the method of obtaining permission for establishment under Article 32 of the Civil Act. In addition, in cases where the plaintiff is a church belonging to the Korea Veterans Association, the competent authority does not separately grant permission for establishment except for some exceptional cases (where it is inevitable, or where it is larger than a certain size compared to the size of the existing juristic person). Thus, in cases of an individual church, it is virtually reasonable to limit inclusion in deductible expenses for the purpose of establishment of the association under Article 56 (1) and subparagraph 1 (e) of Article 36 of the Enforcement Decree of the Corporate Tax Act from among religious organizations, and thus, it cannot be viewed that the competent authority is established by the competent authority under Article 36 (1) 1 (e) of the Civil Procedure Act and Article 37 of the Corporate Tax Act should be interpreted to include an individual church within its jurisdiction.

Therefore, the judgment of the court of first instance is just and the plaintiff's appeal is dismissed. It is so decided as per Disposition by the court of first instance.