No profit or loss from currency forward and swap assessment shall be included in the transaction profit or loss.

Until Article 4(1)5 of the Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 26076, Feb. 3, 2015) explicitly provides that the instant valuation profit and loss shall be included in transaction profit and loss, it is reasonable to deem that the instant valuation profit and loss may not be included in transaction profit and loss.

2015Guhap67809 Revocation of Disposition of Imposing education tax

AAAA bank (business office)

BB Director of the Tax Office

January 10, 2017

March 9, 2017

1. The plaintiff's primary claim and the conjunctive claim are all dismissed.

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

Cheong-gu Office

【State Claim】

On December 2, 2013, the defendant revoked all the amount exceeding the stated amount of "political tax" in the imposition of education tax of the amount stated in the "amount of education tax (including additional tax)" as stated in attached Table 1 against the plaintiff.

【Preliminary Claim】

On December 2, 2013, the part of the disposition imposing education tax (including additional tax) on the amount stated in "the time of reversion" as stated in attached Table 2, which the defendant made against the plaintiff on December 2, 2013 is revoked in excess of the stated amount of "political tax."

1. Details of the disposition;

A. The plaintiff's status

The plaintiff is dealing with derivatives such as a currency forward contract and a currency swap contract with the business office of a foreign bank established for the purpose of banking business.

(b) Report of education tax base;

From February 2, 2010 to April 2012, when the education tax base return was filed, the Plaintiff did not include the currency forward and swap evaluation profit and loss (hereinafter referred to as the "evaluation profit and loss of this case") in the tax base. The Plaintiff calculated the profit and loss from the transaction of foreign currency assets, liabilities, currency forward, swap and other derivatives on the basis of the final realized transaction profit and loss from the initial acquisition to the settlement of accounts, and reported and paid the education tax base.

C. Each disposition of this case

1) Disposition of this case

The Director of theCC Commissioner of the Regional Tax Office, from June 3, 2013 to November 19, 2013, after conducting a consolidated corporate tax investigation with the Plaintiff, included the appraised profit and loss in the income amount at the time of filing the corporate tax return. Thus, the said appraised profit and loss in the corporate tax shall be deemed the income amount under Article 4 (1) 8 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 26076, Feb. 3, 2015; hereinafter referred to as the “former Enforcement Decree of the Education Tax Act”), and shall be deemed the income amount under Article 4 (1) 8 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 26076, Feb. 3, 2015; 2173,683,629; 38,987, 927, 245, 2012; 2.34, 2014, 2012.

2) The instant rejection disposition

On the other hand, on February 24, 2014, with respect to the education tax reported and paid by the Plaintiff on April 2010 to the Defendant, the Plaintiff filed a request for correction of the amount of reduction of the amount of the education tax reported and paid to the Defendant by adding the assessed profits and losses to the education tax base under Article 4(1)5 of the former Enforcement Decree of the Education Tax Act, and by deducting the amount of 59,970,680 won reported and paid excessively, but the Defendant rejected it on April 15, 2015.

(hereinafter referred to as "the rejection disposition of this case" and the disposition of this case in combination with the disposition of this case shall be referred to as "each disposition of this case".

(d) Implementation of the preceding trial procedures;

On March 13, 2014, the Plaintiff filed an appeal with the Tax Tribunal on March 13, 2014, but was dismissed on April 21, 2015. On July 14, 2015, the Plaintiff filed an appeal with the Tax Tribunal on the instant refusal disposition, which was dismissed on November 11, 2015.

[Basis] Facts without dispute, Gap evidence 1-5, Gap evidence 3, 15-17, Eul evidence 1, Eul evidence 2-1 to 5, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The primary claim

Article 4 (2) 2 (d) of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 22046, Feb. 18, 2010) stipulates that the valuation profit or loss of this case constitutes an internal and temporary profit of a financial or insurance business entity. However, Article 4 (1) 5 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 22046, Feb. 18, 2010) deleted "foreign exchange profit or loss (excluding foreign exchange profit)" of the former Enforcement Decree of the Education Tax Act as the revenue amount of the financial or insurance business entity, which was determined as the education tax base for the former, in order to prevent a rapid increase in the burden of education tax due to foreign exchange transactions and derivatives transactions, it should be deemed that the legislators made a legislative decision to aggregate the valuation profit or loss in the foreign exchange transactions in order to prevent a rapid increase in the burden of education tax due to foreign exchange transactions by the financial or insurance business entity, and therefore, it should be deemed that the above valuation profit or loss should be included in the above calculation profit or loss.

2) Preliminary Claim

The valuation profit and loss of this case is merely an internal profit subject to education tax, and must be excluded from the education tax base of the financial and insurance business entities. Therefore, on different premise, the portion exceeding the legitimate tax amount of each of the dispositions of this case should be revoked illegally.

B. Relevant statutes

Attached Form 3 shall be as listed in attached Table 3.

C. Determination

1) As to the main claim

In full view of the following circumstances, it is reasonable to view that the instant valuation profit and loss may not be included in the transaction profit and loss until it explicitly stipulates that the instant valuation profit and loss is included in the transaction profit and loss, as amended by Presidential Decree No. 26076, Feb. 3, 2015, by comprehensively taking into account the following circumstances acknowledged by the relevant statutes and the overall purport of each evidence and arguments as seen earlier. Accordingly, the Plaintiff’s assertion on this part is rejected.

① Article 4(2) of the former Enforcement Decree of the Education Tax Act lists the revenue amount generated from transactions which increase the net assets, and the revenue amount generated by financial and insurance business entities falling under Article 5(3) of the Education Tax Act and each subparagraph of Article 4(1) of the Enforcement Decree of the same Act shall be, in principle, included in the education tax base unless the revenue amount falls under the revenue amount prescribed not to be included in the education tax base under Article 4(2) of the former Enforcement Decree of the Education Tax Act (see, e.g., Supreme Court Decision 2014Du13140, Feb. 12, 2015). However, as seen below 2.0: (a) so long as the revenue amount generated from transactions which increase the net assets falls under the revenue amount of assets and liabilities deemed as gains under Article 42 of the Corporate Tax Act, it shall not be included in the education tax base in principle, and thus, it shall not be included in the internal profit of Article 4(2)2 of the former Enforcement Decree of the Education Tax Act.

(2) Article 5 (3) of the Education Tax Act provides that "amount of revenue of a financial or insurance business entity" shall mean interest, dividend, commission, guarantee fee, securities sales profit and redemption profit, insurance premium and other amounts prescribed by Presidential Decree", and Article 4 (1) of the former Enforcement Decree of the Education Tax Act delegated under Article 5 (3) of the Education Tax Act lists the amount of revenue of a financial or insurance business entity included in the education tax base, and among them, subparagraph 8 of Article 4 of the former Enforcement Decree of the Education Tax Act provides a legal basis to include the amount of revenue not falling under the amount of revenue individually and specifically enumerated in subparagraphs 1 through 7 in the education tax base. If the evaluation profit and loss in this case do not fall under subparagraphs 1 through 7 above, it shall be interpreted that only the amount of evaluation profit and loss falls under subparagraph 8.

③ Under the principle of no taxation without the law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring any special circumstance, and it shall not be extensively or analogically interpreted without any reasonable reason (see Supreme Court Decision 2002Du9537, Jan. 24, 2003). Article 4(1)5, 5-2, and 5-3 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 22046, Feb. 18, 2010) and Article 4(2)2 (a) of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 2302, Jul. 14, 201); so long as the concept of "trade profit," "evaluation profit," and "profit, loss, etc., of derivatives transactions before they become final profit, etc., they cannot be deemed as included in the prescribed amount of education tax (amended by Presidential Decree No. 23014, Feb. 14, 2014).

(4) In addition, derivatives financial product trading profits and derivatives financial product evaluation profits are divided into other accounts in corporate accounting standards, and the plaintiff also seems to have included the derivatives financial product trading profits from the standard income statement as other business profits and the derivatives financial product evaluation profits separately.

⑤ Under Article 42(1)3 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010) and Article 73 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 20619, Feb. 22, 2008; hereinafter “former Enforcement Decree of the Corporate Tax Act”), foreign currency forward and currency swap among currency-related derivatives held by financial institutions as well as foreign currency assets and liabilities held by financial institutions shall be evaluated (increased or decreased book value). Under Article 76(1), (2), and (4) of the former Enforcement Decree of the Corporate Tax Act, foreign currency assets and liabilities shall be evaluated by the basic exchange rate or exchange rate under the Foreign Exchange Transactions Act as of the last day of the fiscal year of the contract, and the currency derivatives shall be evaluated by the taxpayer as at the basic exchange rate or exchange rate under the Foreign Exchange Transactions Act as of the last day of the fiscal year or the date of conclusion of the contract, and shall include profits or losses in the concerned fiscal year from the Korean currency account amount and losses.

On the other hand, Article 4(2)2 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 22046, Feb. 18, 2010) specifies the concept of internal profit excluded from the assessment base of education tax, and incorporates "gains from the evaluation of assets and liabilities that are not deemed as earnings pursuant to Article 42 of the Corporate Tax Act" as the education tax base, and "gains from the evaluation of assets and liabilities deemed as earnings pursuant to Article 42 of the Corporate Tax Act" as the education tax base. Article 4(1)5 of the former Enforcement Decree of the Education Tax Act was amended by Presidential Decree No. 22046, Feb. 18, 2010, the deletion of the overall title of this case can be deemed to be due to the above circumstances. It is difficult to view that there was a legislative decision with a view to calculating the tax base by adding not only foreign exchange profits and losses, but also the instant evaluation profits and losses.

(6) Article 4 (1) of the Enforcement Decree of the Education Tax Act has been amended several times on February 28, 2007, February 4, 2009, February 18, 2010, and July 14, 201, and it is true that the amendment has been made in the direction of adding up various derivatives for the purpose of reducing the burden of education tax on financial and insurance business entities as alleged by the Plaintiff, or that the amendment form is very different. In light of the fact that Article 4 (1) 5 of the former Enforcement Decree of the Education Tax Act as amended on February 18, 2010, deleted from the instant universal title from the perspective of adding up the evaluation profit and loss of this case, it is difficult to accept the Plaintiff’s assertion that the purport of adding up the evaluation profit and loss of this case is based on the legislative intent without any reasonable grounds.

7) The Plaintiff asserts that since the amendment of the Enforcement Decree of the Education Tax Act on February 18, 2010, the taxation practice was formed by including foreign exchange profit and loss on the foreign exchange trading profit after the elimination of the instant subparagraph, and that the scope of "foreign exchange profit and loss" under Article 4 (1) 5 of the Enforcement Decree of the Education Tax Act should be construed as including currency forward and swap and foreign exchange profit and loss on the basis of "foreign exchange profit and loss" under Article 4 (1) 6-2 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 2302, Jul. 14, 201) should not be included in "foreign exchange profit and loss" under Article 4 (1) 5-2 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 23022, Jul. 14, 2011) should not be included in "foreign exchange profit and loss on the basis of "foreign exchange profit and loss" under Article 4 (1) 5-2 of the former Enforcement Decree of the Education Tax Act.

8) Article 8(1) of the Education Tax Act provides that the revenue amount per se, unlike ordinary revenue tax, shall be the tax base due to the unique nature of the purpose tax aimed at securing the financial resources required for expanding the education finance in order to improve the quality of education (in addition, the taxation principle of foreign taxation). Article 8(1) of the Education Tax Act provides that the taxable period has been set differently from the business year of the Corporate Tax Act until the amendment by Act No. 13620, Dec. 29, 2015. The unreasonable issue of taxation, such as double taxation, etc., pointed out by the Plaintiff, is due to the inherent limit in the education tax law system that does not recognize the carried-over deduction, while only the tax base is the revenue amount every three months under the taxation method of the above taxation for a period of three months. Furthermore, if the education tax base of each quarter overlaps in part, it is difficult to regard

① Article 4(1)5 of the Enforcement Decree of the Education Tax Act added "the valuation profit and loss under the Enforcement Decree of the Corporate Tax Act" to the net profit and loss including the valuation profit and loss in currency guidance under Article 76(1) of the Enforcement Decree of the Corporate Tax Act and the valuation profit and loss in currency guidance, etc. for avoiding exchange risk under Article 76(2) of the Enforcement Decree of the Corporate Tax Act in order to rationalize taxable objects by adding "the profit and loss in currency guidance, etc. under the Enforcement Decree of the Corporate Tax Act" to the scope of the revenue amount of finance and insurance business, which is the tax base of education tax, as revised by Presidential Decree No. 26076 on February 3, 2015. The Plaintiff asserted that the above amendment of the Enforcement Decree of the Education Tax Act was merely the one with confirmed meaning, and thus, the Plaintiff's assertion is reasonable to be construed as "the above valuation profit and loss under Article 4(1)5 of the Enforcement Decree of the Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 26075, Feb. 26, 2015, 2015). 201).

In addition, in a case where the pertinent valuation profit and loss is intended to be resolved only by legal interpretation because it does not add the transaction profit and loss to the transaction profit and loss and unreasonable regulation takes place, there may be concerns that the applicable limit of such interpretation would be unclear, thus infringing legal stability. Furthermore, in light of the fact that Article 4(1)5(a) of the Enforcement Decree of the Education Tax Act, amended by Presidential Decree No. 26076, Feb. 3, 2015, Article 4(1)5(a) of the Enforcement Decree of the Education Tax Act, as amended by Presidential Decree No. 26076, provides for the total sum of transaction profit and loss of derivatives, etc. and provides for the total sum of transaction profit and loss of the instant valuation profit

2) As to the conjunctive claim

Article 4 (2) 2 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 22046, Feb. 18, 2010) provides that "profit from the evaluation of assets and liabilities, or the difference in the timing of attribution of earnings and expenses, which falls under any of the following items, shall not be included in the revenue amount which is the education tax base," and "profit from the evaluation of assets and liabilities not deemed as earnings pursuant to Article 42 of the Corporate Tax Act," "profit from the return of expenses not deducted from the tax base", "income from the return of expenses not deducted from the tax base", "amount equivalent to the bad debt and bad debt allowance of the claim in question (c)" among profit from the sale or redemption of bonds, and "other profit (d) externally and temporarily recognized regardless of foreign transactions".

In light of the above circumstances and the overall purport of the evidence and arguments, i.e., the following circumstances: ① the former Enforcement Decree of the Education Tax Act was amended by Presidential Decree No. 22046 on Feb. 18, 2010, excluding internal profit from the income subject to the education tax of financial and insurance business entities, or the timing of attribution of profit and expenses, etc. As such, the items not to be included in the education tax base under Article 4(2) of the revised Enforcement Decree are not listed but rather listed; ② Article 4(2)2 of the former Enforcement Decree of the Education Tax Act excludes internal and temporary profit from the education tax base without the relationship of foreign trade; ② Article 4(2)2 (c) and (d) of the former Enforcement Decree of the Education Tax Act excludes profit and loss from the education tax base, and thus it is necessary to strictly interpret the same subparagraph as supplementary provisions; ③ Article 4(2)2 (a) of the former Enforcement Decree of the Education Tax Act does not fall under the category of the education tax law revised by Presidential Decree No. 2420 of the above.

Therefore, we cannot accept this part of the Plaintiff’s assertion on a different premise.

3. Conclusion

Therefore, all of the plaintiff's main and ancillary claims are dismissed as they are without merit. It is so decided as per Disposition.