(a) Where a corporation which fulfilled the secondary tax liability was unable to exercise the right to demand a reimbursement, the propriety of including the claim for reimbursement in the loss of the claim for reimbursement; and

(b) Where a corporation has paid the corporate tax of another corporation by fulfilling the secondary tax liability as an oligopolistic stockholder, whether such corporate tax falls under subparagraph 3 of Article 16 of the Corporate Tax Act;

A. The corporation A, who has fulfilled the secondary tax liability, acquires a reasonable right to indemnity against the corporation B, which is the principal taxpayer, so it cannot be deemed that the performance of the secondary tax liability, which promptly reduces assets equivalent to the payable tax amount. However, if the corporation A, in a situation where it was unable to exercise the right to indemnity against the said tax amount due to the shortage of assets of the corporation B, it is reasonable to include the claim for indemnity in deductible expenses in the amount of deductible expenses by deeming the irrecoverable claim as the amount of losses.

(b) The corporate tax to be paid or payable for each business year, which is stipulated not to be included in the calculation of losses in the calculation of the income amount of a corporation under Article 16 subparagraph 3 of the Corporate Tax Act, shall mean the corporate tax of the corporation itself which has been paid or is to be paid from the income of the corporation concerned, and it shall not be deemed as the corporate tax in case where a corporation is an oligopolistic stockholder of another corporation and has paid the corporate tax of the other corporation in compliance

(a) Article 9(3) of the Corporate Tax Act, Article 39 subparag. 2 of the Framework Act on National Taxes, Article 16 subparag. 3 of the Corporate Tax Act, Article 39 subparag. 2 of the Framework Act on National Taxes;

[Defendant-Appellant] Korea Education Insurance Co., Ltd. and one other, Counsel for defendant-appellant

The Head of the Maternization Tax Office

Seoul High Court Decision 85Gu400 delivered on September 24, 1985

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

According to the facts duly established by the court below, the plaintiff is an oligopolistic stockholder of the non-party Yong-Nam Distribution Company and the second tax liability for special surtax and its defense tax to be paid by the non-party corporation under Article 39 subparagraph 2 of the Framework Act on National Taxes. At that time, the non-party corporation was in a state where it is unable to exercise the right to indemnity against the tax payable against the non-party corporation because the non-party corporation was under liquidation proceedings without any residual property. Thus, the plaintiff performing the second tax liability cannot be deemed to have acquired the right to indemnity corresponding to the tax payable to the non-party corporation, which is the principal taxpayer, and the above second tax liability cannot be deemed to have suffered losses from the reduction of the plaintiff's assets equivalent to the tax payable immediately due to the non-party corporation's shortage of assets. However, as the court below acknowledged by the court below, if the plaintiff was unable to exercise the right to indemnity against the non-party corporation due to the non-party corporation's shortage of assets, it shall be deemed that the plaintiff's claim for indemnity should be included in deductible expenses in the amount accrued to the plaintiff.

According to Article 16 subparagraph 3 of the Corporate Tax Act, corporate tax paid or payable in each business year shall not be included in the calculation of losses in calculating the income amount, and the corporate tax paid or payable as a secondary taxpayer shall not be included in the calculation of losses. Thus, according to Article 16 subparagraph 3 of the Corporate Tax Act, which is an interpretation provision, the corporate tax paid or payable as a secondary taxpayer shall not be included in the calculation of losses. Thus, although Article 16 subparagraph 3 of the Corporate Tax Act provides that the corporate tax shall not be included in the calculation of losses, the corporate tax paid or payable in each business year, which is stipulated not to be included in the calculation of losses in calculating the income amount of the corporation, means the corporate tax of the corporation itself, which is paid or payable in the calculation of the income amount of the corporation concerned. Thus, if a corporation is an oligopolistic stockholder of another corporation and pays corporate tax of another corporation as the implementation of the secondary tax liability under Article 39 subparagraph 2 of the Framework Act on National Taxes, the basic rule of corporate tax does not constitute the corporate tax, and therefore the court or the general public shall not be legally binding.

In addition, the Plaintiff’s payment of the above tax is a performance of tax liability under the law, and the failure to exercise the right to demand reimbursement is due to the absence of residual property for the non-party corporation, it cannot be deemed an unfair act that unreasonably reduces the tax burden on the corporate income under Article 20 of the Corporate Tax Act. Moreover, if the liquidation procedure of the non-party corporation was not completed at the time when the Plaintiff paid the above tax but the liquidation procedure was in progress without any residual property, the Plaintiff’s claim for reimbursement was confirmed as losses because it is objectively obvious that it cannot be collected at the time when the tax was paid. Thus, it is reasonable for the Plaintiff to have reverted the above deductible expenses to the business year at the time when the tax was paid. Accordingly, it is reasonable for the Plaintiff to have paid the above deductible expenses to be attributed to the business year at the time when the tax was paid. The lower court did not clearly state the Defendant’s assertion on this point, and it is insufficient to determine the reasoning, but the lower court’s above error that the Defendant’s above assertion

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 Yellow-ray (Presiding Justice)