Suwon District Court 2017Guhap70381 (Law No. 29, 2018.29)

Cho Jae-2016-China-1726 (Law No. 23, 2017)

Exchangeable bonds issued shall not be subject to the reduction or exemption of foreign investment tax under the Restriction of Special Taxation Act.

Exchangeable bonds issued shall not be deemed stocks or shares subject to reduction or exemption because they are not included in the ratio of foreign investment under the Restriction of Special Taxation Act.

Corporate tax reduction or exemption for foreign investment under Article 121-2 of the Restriction of Special Taxation Act.

2018Nu67222 Revocation of revocation of a request for corporate tax rectification

Cat○ Co., Ltd.

○ Head of tax office

Suwon District Court 2017Guhap70381 (Law No. 29, 2018.29)

oly, 2019.15

o December 2, 2019

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's rejection of correction of KRW 00,000,000 of the corporate tax for the business year 2010 against the plaintiff on January 5, 2016, and KRW 00,000,000 of the corporate tax for the business year 2011 and KRW 00,000,000 of the corporate tax for the business year 2012 shall each be revoked.

1. Quotation of the reasons for the judgment of the first instance;

This judgment is based on Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act, since the reasoning of the judgment of the court of first instance is the same as that of the judgment of the court of first instance except for the dismissal of the following contents:

The "conversion" of the reasoning of the judgment of the first instance court is different from "Exchange".

○ 4. 10 to 16.

A. In relation to the acquisition of new shares by the N△△△△△△△, it was legally subject to tax reduction or exemption, and the Plaintiff merged with the △△△△△△, thereby succeeding to the effect of tax reduction or exemption by the △△△△△△△△, the Plaintiff shall also be subject to tax reduction or exemption pursuant to Article 121-2 of the Restriction

B. The fact that the N△△△△ transferred the shares 00,000,000 to the Plaintiff in the process of the instant merger is merely that the shareholders of the merged corporation return the shares of the merged corporation to the merged corporation under the Commercial Act, and it cannot be deemed that the transfer under tax law was made. The N△△△△ does not temporarily receive the Plaintiff’s shares, which are the cost of the merger, in order to resolve the issue of the Plaintiff’s foreign shares, and it does not mean that the N△△△△△△ did not recover investments in the K△△△△△, and the said exchangeable bonds merely constitute a security against the Plaintiff’s status as the Plaintiff’s shareholder of the N△△△△△△△△△△ without performing the original function as a bond, and thus, it cannot be deemed that there was a change in the ratio of foreign investment in light of the substance over form principle, and it cannot be denied

C. The Defendant imposed corporate tax on the Plaintiff by denying the inclusion of treasury stock disposal loss in deductible expenses and imposing corporate tax on the Plaintiff around 2012 on the premise that the instant shares 0,000,000 shares were issued to the △△△△△△△△ in return for a merger with the shares 00,000 shares, and that the instant disposition is inconsistent with the Defendant’s judgment at the time of the disposition imposing corporate tax around 2012, and is contrary to the principle of good faith, the principle of prohibition, and the principle of protection of trust.

D. As long as a foreign investor is treated as a single type of foreign investment, it is reasonable to maintain the effect of tax reduction and exemption for 5.08% of the foreign investment ratio to the stocks of this case 0,000,000 shares whose investment with the Plaintiff was maintained in the form of five-year exchangeable bonds.

E. Therefore, the instant disposition shall be revoked in an unlawful manner.

○ 5th 6th 6th 6th son's "foreign investor" is regarded as "foreign investor".

○ 6th 5th 6th 5th 6th 6th 6th 6th 6th 6th 15th 15th 16th 18th 16th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 10th 10

The ○ 6th 21th 21st son’s “relevant,” and the N△△△△△△, even if it did not substantially recover investment in the part of 00,000 shares of K △△△△△, it is difficult to view otherwise.

○ 7 pages 7 to 11 are as follows:

If the parties to a transaction choose one of the several ways to achieve the purpose of the transaction, and form the legal relationship, the content and scope of the taxation thereby shall be determined individually in accordance with the legal relationship. Notwithstanding the legal form, the ultimate goal of different transactions is the same, and thus, it cannot be deemed that the substance is the same or that the foreign investment is treated equally under the Tax Act (see, e.g., Supreme Court Decisions 97Nu1723, May 26, 1998; 2013Du21670, Mar. 13, 2014). The Plaintiff issued △△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△. Accordingly, it is clear that the foreign investment ratio was lower in terms of the Plaintiff’s share exemption.

⑤ The Ministry of Strategy and Finance responded to the question that the corporate tax equivalent to 0,00,000% of the instant shares issued to △△△△△ constitutes the payment of the price for merger to shareholders in economic substance, and thus, the disposal loss following the issuance of treasury shares is not included in the calculation of losses. The Defendant deemed that the Plaintiff’s disposal loss due to exchange of exchangeable bonds constitutes capital transactions and thus not subject to inclusion in the calculation of losses, and accordingly, corrected and notified the Plaintiff of corporate tax 00,000,000 for the business year 209. However, even if the above circumstances and the Defendant deemed that the disposal loss due to exchange of exchangeable bonds constitutes capital transactions, it cannot be deemed that the corporate tax corresponding to 5.08% of the foreign investment ratio to △△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△§.

6. The term "foreign investment ratio", which is the standard for calculating the tax amount to be subject to reduction or exemption under the former Restriction of Special Taxation Act, means "ratio of stocks or shares owned by foreign investors to stocks or shares owned by foreign-invested enterprises". The plaintiff's assertion that it is reasonable to maintain the effect of tax reduction or exemption for 5.08% of the foreign investment ratio to the stocks 0,000,000 shares in this case on a different premise, on the grounds that there are no specific grounds to believe that the loan for more than five years is included in the above "foreign investment ratio" (as a result of the statement of evidence

2. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.