It is difficult to deem that the solicitation of subscription was made while issuing new shares.

Although it is alleged that it falls under the case of allocating securities by the method of public offering, it is reasonable to impose gift tax on the acquisition of low price by holding a board of directors to make a resolution for capital increase with consideration and making it public.

2012Revocation of revocation of imposition of gift tax, 11300

OraA

Head of Central Tax Office

March 26, 2013

May 2, 2013

1. All of the plaintiff's claims are dismissed.

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

Cheong-gu Office

In the first place, the Defendant’s imposition of the gift tax on July 27, 2007 against the Plaintiff on February 10, 201 shall be revoked. In the second place, the Defendant’s imposition of the gift tax on February 10, 201 against the Plaintiff is revoked on July 27, 2007.

1. Details of the disposition;

A. On July 27, 2007, the Plaintiff acquired 275,000 shares (hereinafter referred to as “new shares”) by participating in the third party allocation method of BB stock companies (former trade name:CC; hereinafter referred to as “non-party company”) which are KOSDAQ-listed corporations, for the purpose of acquiring OO shares per share.

B. On February 10, 2011, the Defendant: (a) acquired the instant new shares at a price lower than the market price (the value per share according to the supplementary assessment method; (b) and determined that the Plaintiff received the benefits equivalent to the difference as a donation of KRW OO [OO - x 275,000]; (c) on February 10, 201, pursuant to Article 39(1)1 (c) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”), Article 29 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 20621, Feb. 22, 2008; hereinafter referred to as the “former Enforcement Decree of the Inheritance Tax and Gift Tax Act”).

C. Accordingly, the Plaintiff filed a request for review with the Commissioner of the National Tax Service on August 2, 201. On December 30, 201, the Commissioner of the National Tax Service rendered a decision on July 27, 201 that the Defendant’s imposition of the gift tax OOO on the Plaintiff on February 10, 2011, imposed the penalty tax on the Plaintiff and the remainder of the claim is dismissed.

D. Accordingly, on January 26, 2012, the Defendant corrected the reduction or exemption of the additional OOO on the part of the initial disposition.

(Disposition of OOO on July 27, 2007, which remains after reduction as above, of the initial disposition, is referred to as "the disposition of this case".

[Reasons for Recognition] Evidence No. 1, Evidence No. 1-1-20 of Evidence No. 1-20, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The primary claim

In a case where new shares are acquired at a price lower than the market price through a third party allocation method, gift tax may not be levied on the case where the new shares are allocated by means of public offering (referring to solicitation of subscription to acquire new shares) under Article 2 (3) of the former Securities and Exchange Act (amended by Act No. 8635 of Aug. 3, 2007; hereinafter the same shall apply). However, in issuing new shares through a third party allocation method, the non-party company is not subject to gift tax so long as the Plaintiff solicited 59 persons to make an offer to acquire the new shares through a third party allotment method, and the Plaintiff received the new shares in this case through a securities offering under Article 2 (3) of the former Securities and Exchange Act, and thus, the disposition in this case on

2) Preliminary Claim

The non-party company has many existing minority shareholders (a shareholder who holds less than 1/100 of the total number of outstanding shares, etc. of the corporation and whose total amount of face value of shares is less than 300 million won; hereinafter the same shall apply). The defendant regarded the non-new shares as one group and calculated the donation gains by deeming that the group of minority shareholders has not been allocated new shares. As a result, the sum of the donation profits of the minority shareholders is added and the rate of 20% is applied, thereby applying the rate of 10% higher than the donation profits of the majority shareholders (a person who is not a minority shareholder; hereinafter the same shall apply). Since it is unreasonable to apply the higher tax rate for the donation of a relatively small amount of money, the 10% tax rate should be applied to the donation profits

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Facts of recognition

1) On May 11, 2007, the non-party company held a board of directors meeting to issue 49 shares to 31,827,000 shares per share to 49 persons by means of third-party allotment for the purpose of securing investment funds and operating funds in other corporations (the name shall be stated in the attached list), and the payment date of shares shall be determined by May 30, 2007, and the public notice was made on the website of the Financial Supervisory Service on May 14, 2007.

2) Since then, the non-party company made several revisions on the website of the Financial Supervisory Service regarding the third party allotment and the payment date of stock price, and the increase or decrease details of the third party allotment are as follows.

Board of Directors

5/18

5/21

6/7

6/19

6/26

7/5

Persons eligible for allocation (name)

44

44

42

41

39

35

-an increase (name);

2

0

8

1

0

0

- Reduction (Name)

7

0

10

2

2

4

3) On July 27, 2007, the non-party company offered the above subscription for capital increase with consideration, and 20 of the third party’s third party’s share was offered, and the non-party company allocated 12,058,549 shares in total to them. At the time, the pre-existing shareholders of the non-party company were 2,000 shareholders (1,981 shareholders for minority shareholders, and 19 shareholders for major shareholders).

4) Meanwhile, on May 22, 2007, the non-party company submitted to the Financial Supervisory Commission a securities registration statement and a prospectus for capital increase with respect to the above capital increase with respect to the securities, which was published on May 28, 2007 on the website of the Financial Supervisory Service, and published the preliminary prospectus on the same day on the website.

[Based on recognition] Gap evidence Nos. 3 through 6 (including branch numbers; hereinafter the same shall apply), Eul evidence Nos. 3, 4, 5, 7, and 8, and the purport of the whole pleadings

D. Determination

1) Determination on the first argument

A) Article 39(1)1 (a) and (c) of the former Inheritance Tax and Gift Tax Act provides that where a corporation issues new stocks at a price lower than the market price of the new stocks to increase its capital, in case where a person who is not a shareholder of the relevant corporation obtains profits by directly obtaining such new stocks from the relevant corporation, gift tax shall be imposed on the amount equivalent to the relevant profits as the value of donated property of the person who has acquired such profits: Provided, That where a stock-listed corporation or Association-registered corporation under the Securities and Exchange Act allocates new stocks by means of public offering of new stocks under Article 2(3) of the Securities and Exchange Act, Article 2(3) of the former Securities and Exchange Act provides that "public offering of new stocks is recommended to acquire new stocks which are newly issued under the conditions as prescribed by the Presidential Decree", and Article 2-4(1) of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 20947, Jul. 29, 2008; hereinafter the same shall apply) provides that "public offering of new stocks shall be notified or notified to the purchaser of new stocks".

B) In light of the aforementioned provisions, where a corporation issues new stocks at a price lower than their market price in order to increase its capital, the allocated person obtains profits equivalent to the difference between the company and the allocated person, including the equivalent amount of such profits in the value of donated stocks, and excludes the allocation of new stocks through a securities offering method under the Securities and Exchange Act, thereby excluding the allocation of new stocks at a discount, thereby exempting the imposition of gift tax in cases of public offering even if a person gains profits by offering of new stocks at a discount. This is reasonable to deem that, even if a stock-listed corporation or Association-registered corporation issues new stocks through a public offering procedure under the relevant Acts and subordinate statutes, such as the Securities and Exchange Act and the Securities and Exchange Act, it is reasonable to deem that the pertinent value should be determined again through a fair competition trading procedure between unspecified and unspecified persons, and that a discount is granted to facilitate the financing of a stock-listed corporation or Association-registered corporation, such as the Securities and Exchange Act and other related Acts and subordinate statutes, even if the market price is lower than the market price.

On the other hand, in order to constitute "distribution by a method of public offering of securities, which does not include profits arising from the issue at a low price under Article 39 (1) 1 (a) and (c) of the former Inheritance Tax and Gift Tax Act," under Article 2-4 (5) of the former Enforcement Decree of the Securities and Exchange Act, an act of notifying that securities will be issued or sold or providing guidance on the procedure of acquisition should be conducted, not only by means of newspapers, broadcasting, magazines, etc., such as advertising through newspapers, newspapers, broadcasting, magazines, etc., distribution of printed materials, such as promotional leaflets, holding of an investment presentation meeting, or electronic communications, etc. (see Supreme Court Decision 2003Do7554, Feb. 13, 2004).

C) In light of the above legal principles, the following circumstances can be comprehensively considered as to this case’s health, factual relations and the purport of the entire pleadings, i.e., ① the non-party company’s resolution to issue new stocks with consideration to its board of directors and cannot be deemed to be the solicitation of subscription under Article 2(3) of the former Securities and Exchange Act. ② Although the non-party company submitted a securities registration statement, it seems to fall under Article 2-4(4) of the former Enforcement Decree of the Securities and Exchange Act (the case where the number of persons who are invited to subscribe is less than 50 and do not fall under the resale standard prescribed by the Financial Services Commission). The non-party company cannot be deemed to be an investor (5) who participated in the public offering of new stocks through the 7th meeting of the 7th meeting of the 7th meeting of the 7th meeting of the 7th meeting of the 2nd meeting of the 3rd meeting of the 2nd meeting of the 3rd meeting of the 2nd meeting of the 3rd meeting of the 3rd meeting.

2) Judgment on the second argument

Article 39 (2) of the former Inheritance Tax and Gift Tax Act provides that "in applying the provisions of paragraph (1) 1, where there are not less than 2 minor shareholders who renounced the right to receive new shares in the application of the provisions of subparagraph 1 of this Article or who obtained the allocation under equal conditions in proportion to the number of their possessed shares (including the case where new shares are not allocated), the profit shall be calculated by deeming that one of the minority shareholders has renounced or obtained the allocation insufficiently." The above provision provides that where minority shareholders have renounced the acquisition of new shares (in particular, where there are many listed corporations, etc. like the non-party company, when offering new shares through the third party allocation method, it is difficult to calculate the donation amount by donor in practice, and it is difficult to calculate the donation amount by donor in order to solve the problem where gift amount by minority shareholders falls short of the minimum amount of taxation, and thus, gift tax is not imposed (see the amended Act by Act No. 6301, Dec. 29,

With respect to this case, the non-party company's minority shareholders at the time of issuance of new shares constitutes 1,981 cases where there are two or more minority shareholders at the time of issuance of the new shares. The defendant calculated the donation profit (OOO) by deeming that one of the minority shareholders has renounced acceptance of new shares pursuant to Article 39 (2) of the former Inheritance Tax and Gift Tax Act and applied the corresponding tax rate (20%). It is argued to the effect that there is no illegality in law as it is in accordance with the requirements prescribed by the law and there is no error of law regarding the disposition of this case (OO profit). However, Article 39 of the former Inheritance Tax and Gift Tax Act argues to the effect that 10% of the donation profit of the minority shareholder (OO profit) should be applied to the donation profit of the minority shareholder as well as the donation profit of the majority shareholder, since there is no direct contract or contact between the donor and the donee, the existing shareholder's allocation of new shares is deemed to have a difference between the market price of the existing shares and the subscription profit of the minority shareholder.

3. Conclusion

The plaintiff's claim is dismissed as it is without merit.