Seocho 2012west 1613 (Ob. 28, 2012)

The tax credit for research and human resources development expenses incurred in the entrustment shall not be made whether the trustee has a dedicated department.

Even if a domestic corporation entrusts research and development services to an enterprise that does not hold a department exclusively in charge of research and development, such research and development service costs shall be subject to tax credit.

2012Guhap36088 Revocation, etc. of Disposition rejecting a request for rectification of corporate tax

AAAADPPS Ltd.

Head of Yongsan Tax Office

April 30, 2013

June 14, 2013

1. The Defendant’s rejection of each claim for correction against the Plaintiff on December 26, 201, regarding KRW 000 of corporate tax for the business year 2008, KRW 000 of special rural development tax for the business year 2008, KRW 000 of corporate tax for the business year 2009, and KRW 000 of special rural development tax for the business year 2009, shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff, a corporation that is engaged in the liquid panel manufacturing business, entered into a contract with AAAACS (hereinafter “the instant trustee company”) that owns a department in charge of research and development in the business year of 2008 and 2009 to improve the flexibility of the company through the efficient establishment and operation of an effective system and to achieve management goals through process innovation (hereinafter “instant entrustment contract”), and paid 000 won for research and development expenses.

B. At the time of filing a corporate tax for the pertinent business year, the Plaintiff did not apply the tax credit for research and human resources development expenses under Article 10 of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010), but applied the tax credit for the investment in facilities for improvement of productivity under Article 24 of the former Restriction of Special Taxation Act, and reported and paid corporate tax by deducting 000 won, which is 3% of the expenditure for research and development expenses, from the calculated tax amount.

C. After that, on November 15, 201, the Plaintiff: (a) considered research and development expenses paid by the Plaintiff to the instant entrusted enterprise as KRW 000,00 of the development personnel expenses ( KRW 000 for the business year 2008 and KRW 000 for the business year 2009) and the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008 for the business year 2008; (b) the corporate tax for the business year 2009 constituted small definition research and human resources development expenses under Article 10 of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 200; hereinafter referred to as the “former Restriction of Special Taxation Act”); and (c) deducted the special rural development tax for the business year 200, KRW 000 for the business year 200, and KRW 200 for the special rural development tax for the year 2009.

D. On December 26, 2011, the Defendant: (a) on the premise that the money paid by the Plaintiff was for research and development; (b) on the ground that the expenses re-entrusted by the trustee to a third party are not subject to tax credit; (c) the corporate tax amount for the business year 2008, the special rural development tax for the business year 2008, the special rural development tax for the business year 2009, and the special rural development tax for the business year 2009, and the tax amount for rural development tax for the business year 2000, and rejected the remainder of the Plaintiff’s request for correction.

E. Accordingly, the Plaintiff filed a request for judgment on March 22, 2012, and the Tax Tribunal made a request on June 28, 2012, on the premise that the money paid by the Plaintiff to another company was for research and development, and on the premise that it is reasonable for the entrusted company to recognize the expenses paid by the entrusted company to be subject to the tax credit for research and development expenses from among the research and development expenses re-entrusted by another company, and on December 26, 201, the decision to refuse a request for correction of KRW 200,000, and KRW 000,000, and KRW 200,000,000, which was paid by the Defendant to the Plaintiff on December 26, 2011, was dismissed.

F. In accordance with the purport of the above judgment decision, the Defendant recognized the tax credit for research and development expenses re-entrusted to an enterprise having a dedicated department on July 27, 2012, and additionally refunded KRW 000 and KRW 000 and KRW 000 of the corporate tax belonging to the business year 2008 and the special rural and fishing villages tax belonging to the business year 2009 (hereinafter “instant disposition”). (The details of refund on the request for correction are as follows, and the Plaintiff’s rejection disposition on the remaining portion without correction and refund is referred to as “the disposition”).

(The following table omitted):

[Ground of Recognition] The non-speed facts, Gap evidence 1, 2, Eul evidence 1, 3, Gap evidence 4-1, 2, and 3, Gap evidence 6-1 through 4, Gap evidence 7, and evidence 8-1 through 12, and the purport of the whole pleadings

2. Whether the lawsuit of this case is lawful

The defendant asserts that the lawsuit in this case was filed on October 29, 2012 after 90 days from July 2, 2012 after the date when the plaintiff received notification of the decision on the request for adjudgment, and that the lawsuit in this case was unlawful because it was filed with the lapse of the filing period. The re-audit decision which is conducted in practice as a type of the decision on the request for adjudgment is in the form of re-auditing the matters pointed out in the relevant decision on the whole or part of one taxation unit, so that the disposition authorities correct the tax base and tax amount or maintain the initial disposition according to the result, and the re-audit decision becomes effective as a decision on the request for adjudgment by supplementing the contents thereof by the follow-up disposition of the disposition authorities, so it is reasonable to view that the 20th anniversary of the date when the claimant, etc. received notification of the subsequent disposition (see Supreme Court en banc Decision 207Du12514, Jun. 25, 2010).

3. Whether the instant disposition is lawful

A. The parties' assertion

(1) Plaintiff

If research and development services have been entrusted to an enterprise holding a department exclusively in charge of research and development, regardless of whether it has a department exclusively in charge of re-entrusted and re-entrusted enterprises, and expenses incurred in entrustment shall be subject to tax credit under Article 10 (1)

(2) Defendant

(A) First of all, it was not revealed whether the costs for the commission of research and development services alleged by the Plaintiff were used for research and development activities. Furthermore, in order to constitute a research outline in the interpretation of Article 9(5) of the Restriction of Special Taxation Act, the elements of the patent should be recognized; newness and truth; and construction of computer systems cannot be deemed to meet these requirements.

(B) The following, and the Restriction of Special Taxation Act classifys the entrustment and re-entrustment. In other words, Article 10(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272 of Dec. 26, 2008), and Article 9(2) [Attachment 6] of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307 of Feb. 4, 2009), and Article 9(2) [Attachment 6] subparagraph 1(b) and 209 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Act No. 9921 of Jan. 1, 2010), Article 9(2)1 of the former Restriction of Special Taxation Act (amended by Presidential Decree No. 21676 of Aug. 6, 2009), and Article 8(1) [Attachment 6] of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 2165 of the Special Taxation Act) provides that the research sector is not subject to sub-entrustment 25(25).

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Whether research and development constitutes "research and development"

Article 9 (5) of the Restriction of Special Taxation Act provides that "nbb development is an activity to achieve scientific or technical progress and to develop a new service and service delivery system." As seen in the above disposition circumstances, it is difficult to regard the service entrusted by the Plaintiff as a research and development since the service is built of a systematic and comprehensive system to enhance core business and service competitiveness, and to achieve the optimal and efficient operation of information and communications technology, and it is difficult to regard it as a research and development. Meanwhile, although the term "synb" or "new products" is included in the above provision, the research and development is not for acquiring a patent, and it is not for the purpose of acquiring a patent, and it is not appropriate to interpret that the research and development should be equipped with "newness" and "synchability, which are the requirements for the patent, for the purpose

(2) Whether it is not subject to tax credit if re-entrusted

In light of the principle of no taxation without the law, or the interpretation of tax laws and regulations is not allowed to be interpreted in a broad or analogical interpretation without any special circumstance (see, e.g., Supreme Court Decision 2002Du6781, May 27, 2004). In case of corporate tax for 2008, Article 10(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008) and Article 9(2) [Attachment 6] of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307, Feb. 4, 2009), which provides that it is difficult for the Plaintiff to apply tax credit to the dedicated department to the above dedicated department for research and development, and that it is difficult to expect that it would be subject to tax credit to the above dedicated department for research and development, and that it is still difficult for the Plaintiff to directly or partially re-entrusted to the dedicated department.

(3) Sub-decisions

Therefore, the instant disposition that held that research and development expenses re-entrusted to a re-entrusted company that does not hold a dedicated department does not constitute a tax credit for research and human resources development expenses under Article 10 of the former Restriction of Special Taxation Act is unlawful.

4. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is so decided as per Disposition.