early 2014west050 ( December 22, 2014)

A company which is postponed by a small and medium enterprise shall not be excluded from the deferred enterprise under the newly introduced related company system.

It is reasonable to exclude a company from a small or medium enterprise when it is not a small or medium enterprise under the related company system, and it is not effective even after the grace period was applied by the newly introduced related company system to a company under the deferment of the small or medium enterprise.

Article 2 (2) of the Enforcement Decree of the Restriction of Special Taxation Act

2015Guhap553 Revocation of Disposition of Corporate Tax Imposition

DongAAAA

Head of Geumcheon Tax Office

September 17, 2015

December 24, 2015

1. The Defendant’s disposition of imposing corporate tax of KRW 341,545,460 (including additional tax) for the business year 2012 against the Plaintiff on September 30, 2013 shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff is a corporation that runs the business year from January 1 to December 31 of each year. The amount of sales and equity capital in the business year 2009 exceeds KRW 100 million for the first time, and the scope of a small and medium enterprise is determined by delegation under Article 5(1) of the former Restriction of Special Taxation Act (amended by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010); however, pursuant to the main sentence of Article 2(2) of the former Enforcement Decree of the Restriction of Special Taxation Act, the Plaintiff is not a small and medium enterprise pursuant to the proviso to Article 2(1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 2010, Mar. 23, 2012.

B. Article 3 subparag. 2 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises amended by Presidential Decree No. 21368 on March 25, 2009 provides that the number of full-time workers, capital, sales, equity capital, or total assets (hereinafter referred to as “regular number, etc.”) calculated pursuant to Article 7-2 shall not exceed the standards under Article 3 subparag. 1, and Article 1 subparag. 2(c) of the Addenda provides that the amended provisions of Article 3 subparag. 2(c) shall enter into force on January 1, 201.

C. After December 30, 2010, the Enforcement Decree of the Restriction of Special Taxation Act was amended by Presidential Decree No. 22583 on December 30, 2010. Article 2(1)3 of the former Enforcement Decree of the Framework Act on Small and Medium Enterprises provides that "the substantial independence shall meet the provisions of Article 3 subparag. 2(a) through (c) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises", and in the latter part, "the excess of the standards under Article 3 subparag. 1 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises" shall be deemed as "the standards under the proviso of Article 2 subparag. 2(c) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises when applying Article 3 subparag. 2(c) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises," and ultimately, in the case of an enterprise belonging to a "affiliated company, the number of employees calculated pursuant to Article 7-2 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises shall not meet the standards under the latter part 2(c.

D. The Plaintiff, a company subject to external audit, acquired 62.74% of the shares of Nabio Stock Company (hereinafter “Nabio”), around 2006. Pursuant to the above revised provisions, the Plaintiff and Nabio-related company were deemed to fall under “Nabio-related company” and the sales and equity capital calculated pursuant to Article 7-2 of the Enforcement Decree of the above Act in the business year 2012 exceeded 10 million won.

E. The Plaintiff reported a tax credit for research and human resources development expenses under Article 10 of the former Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 11614, Jan. 1, 2013) and a tax amount subject to temporary tax credit for investment and tax credit for job creation under Article 26, on the grounds that the Plaintiff is under the grace period deemed as a small

F. According to Article 2(1)3 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 24271, Dec. 28, 2012; Presidential Decree No. 24271, Jan. 1, 2013), the Defendant determined that the Plaintiff cannot be subject to the grace period pursuant to the proviso of Article 2(2)3 of the said Enforcement Decree because the Plaintiff did not fall under a small or medium enterprise beyond the related company’s standards. Accordingly, the Defendant revised the tax credit amount reported by the Plaintiff on September 30, 2013 on the ground that the Plaintiff was not a “small or medium enterprise,” and issued a disposition of imposing corporate tax of KRW 341,545,460 (including additional tax) (hereinafter “instant disposition”).

G. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on December 19, 2013. However, upon dismissal on December 24, 2014 (Service on December 29, 2014), the Plaintiff appealed and filed the instant lawsuit on March 25, 2015.

[Ground for Recognition: Facts without dispute, Gap evidence 1 through 5, entry of Eul evidence 1 and 3, purport of whole pleadings]

2. The assertion and judgment

A. The plaintiff's assertion

1) The proviso of Article 2(2)3 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22583, Dec. 30, 2010) (amended by Presidential Decree No. 22583, Dec. 30, 2010) is applicable only to a company which is under the grace period to be deemed a small or medium enterprise, and does not apply to a company which is under the grace period to be deemed a small or medium enterprise. However, the Plaintiff is not a small or medium enterprise in a business year 2009, and the Plaintiff is not subject to the proviso of Article 2(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 24271, Jan. 1, 2013; Presidential Decree No. 22013, Dec. 28, 2010).

2) The latter part of Article 2(2) proviso of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22583, Dec. 30, 2010) provides that a grace period shall not apply to a company under a grace period under subparagraph 2 of Article 2 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22583, Dec. 30, 201) from the taxable year in which the date of merger falls. As such,

3) Where a small and medium enterprise and a small and medium enterprise are related enterprises, both small and medium enterprises shall be subject to the aggregate criteria of small and medium enterprises. However, where an enterprise under the grace period and a small and medium enterprise become related enterprises, a small and medium enterprise shall not be deemed a small and medium enterprise due to the application of related company regulations. However, an enterprise that has already exceeded the standard of judgment of a small and medium enterprise shall be treated as a small and medium enterprise during the grace

(b) Related statutes;

Attached Form is as shown in the attached Form.

C. Determination

1) Interpretation of 'small and medium enterprise'

Unless otherwise expressly provided for in Articles 10(1) and 26(1) of the former Restriction of Special Taxation Act (amended by Act No. 11614, Jan. 1, 2013), it is reasonable to determine the scope of a small or medium enterprise pursuant to Article 2 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 24271, Dec. 28, 2012; Act No. 24271, Jan. 1, 2013; hereinafter referred to as "small or medium enterprise") which is subject to a grace period deemed a small or medium enterprise pursuant to the main sentence of Article 2(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Act No. 11614, Jan. 1, 2013; hereinafter referred to as "small or medium enterprise") and Article 10(1) of the former Restriction of Special Taxation Act (amended by Act No. 2614, Jan. 1, 2013).

2) Whether the enterprise constitutes a "enterprise during the grace period to be considered as a "small or medium enterprise" (whether the grace period expires)

Considering the following circumstances, it is reasonable to interpret the provision to limit the scope of enterprises subject to a grace period to be subject to a grace period under the proviso to Article 2(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 24271, Dec. 28, 2012; hereinafter referred to as the "Enforcement Decree") and to interpret the basic nature of the proviso to Article 2(2) as "the provision to invalidate the grace period granted to companies already regarded as small and medium enterprises pursuant to the main sentence of Article 2(2)" rather than to interpret as "the provision to reduce the grace period under the proviso to Article 2(2) as "the provision to restrict the scope of enterprises subject to a grace period under the proviso to Article 2(2)." Therefore, it is reasonable to interpret that the Plaintiff is still subject to a grace period under the proviso to Article 2(2) as "a small and medium enterprise for which the grace period has already been granted to the Plaintiff during the business year from 2009 to 2012.

A) The structure and language of the provision

The main sentence of Article 2(1) of the Enforcement Decree and each subparagraph of Article 2(1) of the Restriction of Special Taxation Act prescribe the scope and requirements of small and medium enterprises under the delegation of Article 5 of the Restriction of Special Taxation Act, and the proviso of Article 2(1) of the Enforcement Decree determines the passive requirements of small and

In addition, the main text of Article 2(2) of the Enforcement Decree provides that the grace period shall not apply to a small or medium enterprise which falls under the proviso of paragraph (1) other than each subparagraph or is no longer deemed a small or medium enterprise due to the expansion of its scale, etc. in excess of the standards for small or medium enterprises under paragraph (1) 1; the taxable year including the date on which the first reason occurred and the following three taxable years. Furthermore, the proviso of Article 2(2) of the Enforcement Decree provides that: (1) where a small or medium enterprise merges with a company other than a small or medium enterprise under the Framework Act on Small and Medium Enterprises; (2) where a company falls under a merger with another company under the grace period; (3) where a company does not fall under a small or medium enterprise as of the end of the taxable year within two years from the end of the taxable year to which the date of establishment falls; and (2) the latter part of Article 2(2) of the Enforcement Decree provides that the grace period shall not apply to a merger with a company under the grace period from the taxable year to which falls.

In full view of the above legal provisions, Article 2(1) of the Enforcement Decree sets the scope and requirements of "small and medium enterprises" according to delegation under Article 5 of the Restriction of Special Taxation Act, and Article 2(2) of the Enforcement Decree of the same Decree sets the scope and requirements of "small and medium enterprises" as "small and medium enterprises" under Article 2(1) of the same Decree, but it is apparent that "small and medium enterprises" under the above provision mean "small and medium enterprises" under Article 2(1) of the same Decree. Furthermore, it is reasonable to interpret that the former part of Article 2(2) proviso of the Enforcement Decree of the same Decree limits the scope of "small and medium enterprises deemed small and medium enterprises for a certain grace period" under Article 2(1) of the same Enforcement Decree to mean "small and medium enterprises as "small and medium enterprises" under Article 2(1) of the same Decree, and it is reasonable to interpret that "small and medium enterprises" under Article 2(1) of the same Enforcement Decree is not included in "small and medium enterprises

B) The issue of meeting the requirements set forth in the proviso of Article 2(2) of the Enforcement Decree

시행령 제2조 제2항 단서에서는 중소기업이 '다음 각 호의 어느 하나의 사유로 중소기업에 해당하지 아니하게 된 경우'를 그 적용 요건으로 규정하고 있는데, '유예기간 중에 있는 기업'은 위 각 호의 사유가 발생하기 전에 이미 제1항 단서에 해당되거나 제1항 제1호의 기준을 초과함에 따라 중소기업에 해당하지 아니하게 된 기업이므로, 그 이후 제2항 단서 각 호의 사유가 발생한다고 하더라도 ��각 호의 사유로 중소기업에 해당하지 아니하게 된 경우��에 해당하지 않아 제2항 단서가 정한 위 요건을 충족시킬 수가 없게 된다. 따라서 '중소기업으로 보는 유예기간 중에 있는 기업'이 제2항 단서의 '중소기업'에 포함되는 것으로 해석하는 것은 제2항 단서의 문언에 배치된다.

C) Interpretation of the reasons under Article 2(1), (2), and (4) of the Enforcement Decree

First, the proviso of Article 2 (2) 1 and 2 of the Enforcement Decree provides for exceptions to the grounds for recognition of the grace period under the main sentence of Article 2 (2) of the Enforcement Decree to companies other than small and medium enterprises under the Framework Act on Small and Medium Enterprises or companies under the grace period due to such mergers, and it is natural to interpret that Article 2 (2) 4 of the Enforcement Decree provides that "where a cause for recognition of the grace period occurs due to such mergers."

D) Interpretation of the latter part of Article 2(2) proviso of the Enforcement Decree

The latter part of the proviso of Article 2(2) of the Enforcement Decree provides that where a small or medium enterprise becomes no longer a small or medium enterprise due to a merger with an enterprise during a grace period, the said provision shall not apply from the taxable year in which the date of merger falls. However, it is reasonable to view that the latter part of the proviso of Article 2(2) of the Enforcement Decree as a provision invalidation of the grace period. However, if a small or medium enterprise merges with another enterprise during a grace period, if it becomes no longer a small or medium enterprise upon meeting the grounds for recognition under the main sentence of Article 2(2) of the Enforcement Decree, such merger does not grant a grace period to the "small or medium enterprise that is merged" under the former part of Article 2(2) proviso of the Enforcement Decree. Furthermore, the latter part of Article 2(2) proviso of the Enforcement Decree clearly separates the provisions and purport of the former part of Article 2(2) from the former part of the Enforcement Decree to the "small or medium enterprise that clearly expresses the subject matter of the grace period" in the former part.

(e) the need for specific and definite provisions for the invalidation of the grace period;

Since the benefit of the grace period has already been granted to an enterprise under the grace period for three years, there is no provision providing a specific and clear basis in order to invalidate such grace period. The former part of Article 2(2) proviso of the Enforcement Decree provides that the grace period shall not apply in the case of " ..............." Even if we consider otherwise, it is difficult to interpret the former part of Article 2(2) proviso of the Enforcement Decree to mean the invalidation of the grace period. Since the former part of Article 2(2) proviso of the Enforcement Decree does not provide any provision as to the invalidation of the grace period from the time of the grace period, it is unreasonable to immediately exclude such provision from the effect of the amendment since there is no express provision as to the exclusion of the grace period from the time of the occurrence (in this case, Article 2(1)3 proviso of the Enforcement Decree of the Restriction of Special Taxation Act (Article 3 subparag. 2(c) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises) and the latter part).

In addition, it is difficult to interpret the former part of Article 2(2) proviso of the Enforcement Decree as the invalidation provision of the grace period. In fact, the latter part of Article 2(2) proviso of the Enforcement Decree provides that the grace period shall not apply from the taxable year in which the date of merger falls.

F) Determination on the issue of equity;

As claimed by the Defendant, small and medium enterprises beyond its related company standards

Although the grace period is not granted in cases where a company during the grace period exceeds the standards for related companies as in the instant case, there is no room to view that the grace period still remains contrary to equity. However, this is merely due to the lack of legislation to accomplish the intent of not granting the grace period in cases where a small or medium enterprise does not fall under a small or medium enterprise beyond the standards for related companies. Therefore, it is not permissible to invalidate the grace period already granted to a company during the grace period without sufficient legal basis. In fact, according to the main text and proviso of Article 2(2)3 of the Enforcement Decree of the Restriction of Special Taxation Act amended by Presidential Decree No. 26070, Feb. 3, 2015, even if a company does not fall under a small or medium enterprise beyond the standards for related companies, the grace period is applied even in cases where the company does not fall under a small or medium enterprise beyond the standards for related companies, and the excess of the standards for related companies does not fall under the grounds for the restriction on the application of the grace period.

G) Determination on the substantial meaning of Article 2(2)3 proviso of the Enforcement Decree

In light of the proviso of Article 2(2)3 of the Enforcement Decree, "a case falling under an enterprise other than a company under Article 2(1)3 of the Enforcement Decree" refers to a case falling under the main sentence of Article 2(2) of the Enforcement Decree, and there is no particular relation to the grounds for recognition of the grace period under the main sentence of Article 2(2) of the Enforcement Decree, which only means that the grace period should not be applied to a case falling under an enterprise which fails to meet the requirements of Article 2(1)3 of the Enforcement Decree, one of the requirements of a small or medium enterprise. Ultimately, if a small or medium enterprise does not fall under the category of a small or medium enterprise due to its failure to meet the requirements of substantial independence

In this regard, it can be predicted that "for the practical meaning of the proviso of Article 2 (2) 3, at least in cases where the proviso of Article 2 (2) 3 is applied, it includes "an enterprise under the grace period to be regarded as a small or medium enterprise" in the proviso of Article 2 (2). Article 2 (2) (proviso) (3) can be said that "in cases where an enterprise under the grace period to be regarded as a small or medium enterprise fails to meet the requirements for the substantive independence of Article 2 (1) 3, it shall be interpreted as having the nature of a provision to invalidate the effects of the grace period already granted," but there is a problem in the legal system that should be viewed differently from the nature of Article 2 (2) 1, 2, and 4 of the Enforcement Decree.

3) Sub-determination

As the Plaintiff is deemed to be a small and medium enterprise subject to the grace period until the business year 2012, and the grace period has not been invalidated, the Plaintiff’s general research and human resources development tax credit and employment-generating tax credit for the business year 2012 should be applied on the premise that the Plaintiff is a small and medium enterprise. However, the instant disposition was made under the premise that the Plaintiff is not a small and medium enterprise. Accordingly, the Plaintiff’s business necessary to

3. Conclusion

If so, the plaintiff's claim is reasonable, and it is decided as per Disposition.