Seocho 2016west 1608 (21, 2016.21)

It is necessary to determine whether the aggregate of common shares and preferential shares exceeds 10 billion won, not only the portion to be included in the preferred shares, but also the portion to be included in the shares.

Article 157 (4) of the Enforcement Decree of the Income Tax Act provides that ownership of not less than 3/100 of the total amount of stocks of a corporation and the total market price of stocks, etc. shall be not less than 10 billion won, and there shall be no provision that only stocks with voting rights shall be issued or that they shall be divided into common stocks

Article 157 (Scope of Securities Depository Securities and Large Stockholders) of the Enforcement Decree of the Income Tax Act

2016Gudan24093 Revocation of Disposition of Imposing capital gains tax

AAA and 1

The head of Yangcheon Tax Office

March 10, 2015

April 18, 2017

1. The plaintiffs' claims are dismissed.

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

Cheong-gu Office

The Defendant’s imposition of the OOO on September 10, 2015 against Plaintiff AA and the imposition of the OOOO on September 8, 2015 against Plaintiff BB on September 2015 respectively.

1. Details of the disposition;

A. On December 31, 2011, the Plaintiffs and Plaintiff AA’s father CCC, mother DD, and East EE held, as indicated below, the aggregate of the common shares of FF Co., Ltd. (hereinafter “Nonindicted Co., Ltd.”) a listed company as of December 31, 201 (hereinafter “Nonindicted Co., Ltd”).

B. The Plaintiffs transferred the shares of Nonparty Company around 2012, but did not report and pay the transfer income tax.

C. The Defendant: (a) on September 10, 2015, on the ground that: (b) the Plaintiffs constituted a major shareholder under Article 94(1)3(a) of the former Income Tax Act (amended by Act No. 12738, Jun. 3, 2014; hereinafter “former Income Tax Act”); and (c) Article 157(4)2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24356, Feb. 15, 2013; hereinafter “former Enforcement Decree of the Income Tax Act”); and (d) on September 10, 2015, the Defendant decided that the Plaintiff’s shares were transferred to Nonparty and notified Plaintiff A of the transfer income tax reverted to Plaintiff AA for 2012 and the transfer income tax reverted to Plaintiff B on September 8, 2015, respectively.

D. On December 11, 2015, Plaintiff AA, and Plaintiff BB, respectively, filed an appeal with the Tax Tribunal on December 15, 2015, but all of the aforementioned claims were dismissed on June 21, 2016.

E. Around September 2016, the Defendant conducted an investigation into capital gains tax for the year from 2010 to 2014 against the Plaintiffs, and subsequently, on November 28, 2016, reduced or corrected KRW OO of capital gains tax for the year 2012 against Plaintiff AA, and KRW OO of capital gains tax for the year 2012 against Plaintiff BB (hereinafter “instant disposition”).

Facts that there is no dispute over recognition, Gap Nos. 1, 2, Eul Nos. 1 through 4 (including Serial No. 1) and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The issue of whether the shares of the non-party company, which is owned by the Plaintiffs and their related parties, exceed 10 billion won, should be calculated separately from the common shares and the preferential shares, even if they are included in the subject matter of taxation. However, the shares of the non-party company, which are owned by the Plaintiffs and their related parties, exceed 10 billion won only when aggregating the common shares and the preferential shares, and does not exceed 10 billion won when aggregating the common shares. Accordingly, the disposition of this case made on the premise that the Plaintiffs are included in the subject matter of taxation of capital gains tax,

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) Under the principle of no taxation without law, the elements of taxation, non-taxation, or tax reduction or exemption shall be avoided, and the interpretation of tax laws and regulations shall be governed by the law, barring any special circumstance, and it shall not be permitted to expand or analogically interpret without reasonable grounds (see, e.g., Supreme Court Decisions 95Nu1491, Dec. 6, 1996; 97Nu20090, Mar. 27, 1998).

2) Considering the aforementioned legal principles and the following circumstances recognized in the instant case, “stocks, etc.” as stipulated in the instant provision ought to be determined whether not only include priority share but also exceeds 10 billion won by aggregating common share and priority share. Accordingly, the instant disposition is lawful.

① Article 94(1)3 (a) of the former Income Tax Act only borrows the concept of a stock-listed corporation from the Financial Investment Services and Capital Markets Act (hereinafter “Capital Markets Act”) and delegates the major shareholder requirements to the Enforcement Decree. Article 157(4) of the former Enforcement Decree of the Income Tax Act provides, “Where a corporation owns not less than 3/10 of the total amount of stocks, etc. of the corporation (Article 157(1)1) and the total market value of stocks, etc. is not less than 10 billion won (Article 94(1)3 (a) of the former Income Tax Act (Article 94(1)2),

② The instant provision also purports to promote the equity of taxation with respect to the transfer of real estate and other assets by determining where income from the transfer of listed stocks is to be taxed. As such, it does not necessarily require any purpose or result of tax avoidance.

③ Since the Plaintiffs refer only to the shares with voting rights under the Capital Markets Act, they claim that the shareholders should be excluded from those with no voting rights in determining a large shareholder under the Income Tax Act, but there is no need to interpret the scope of the large shareholder under the Income Tax Act as identical to the Capital Markets Act, different from the legislative intent of the

3. Conclusion

All of the plaintiffs' claims are dismissed as it is without merit, and it is so decided as per Disposition.