Cho-2016-China-4369 ( May 19, 2017)

In addition to the circumstances showing the intention of active concealment, it can be recognized that the imposition and collection of taxes may be impossible or remarkably difficult.

In addition to circumstances showing the intention of active concealment, such as non-declaration or underreporting of taxable objects and intentionally failing to enter revenues, sales, etc. in books, false entry in books, and repeated use of multiple borrowed accounts, etc., it can be recognized that the imposition and collection of taxes is impossible or remarkably difficult.

Article 47-3 of the National Tax Basic Act

2017-Gu Partnership-6768 Global Income Detailed and Revocation of Disposition

AA

o Head of the tax office

November 15, 2017

oly 2018.17

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

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

Cheong-gu Office

The Defendant’s disposition on August 8, 2016, exceeding KRW 18,697,00, among the disposition on imposition of global income tax of KRW 74,788,010 on global income tax of KRW 74,788,010, and the disposition on imposition of KRW 384,135,921 on global income tax of KRW 2014, which exceeds KRW 96,03,980, respectively, shall be revoked.

1. Basic facts

A. The Plaintiff’s business purposes are Korea* NAA Group’s management, including design and supervision, architecture, artificial engineering, and machinery, electrical engineering, and fire-fighting construction, etc. as the chairperson of the NAA Group’s 'AAAA Group’ (hereinafter referred to as “BA Group’). BB development is a corporation established for the purpose of new construction, construction, etc. of buildings delegated by the CC Federation and its unitCC as a subsidiary of the CC.

B. From around 2013 to 2015, the Plaintiff received a total of KRW 3,53,993,886 (hereinafter “the instant income amount”) from the 21 subcontractors related to various construction projects performed by the AA Group (hereinafter “instant subcontractors”) and received a payment of the said subcontractor’s 3,553,93,886 (hereinafter “the instant income amount”) as shown in the attached list among the 21 subcontractors ordered by theCC, etc., and used it for private purposes, such as stock investment, living expenses, etc., and the Defendant filed a return and payment of the total income tax in 2013 and 2014 as the Plaintiff’s total income was omitted from the Plaintiff’s income.

C. On August 8, 2016, on the ground that “the Plaintiff was omitted from filing an income tax return on the instant income,” the Defendant additionally issued a disposition of underreporting the amount of KRW 3,112,193,49 of the global income tax calculated by adding the Plaintiff’s global income tax base for the year 2013 and year 2014, and the amount of global income tax for the year 2013 and year 2014, which is the difference between the Plaintiff’s previously filed and paid global income tax for the year 2013 and the amount of global income tax for the year 2014, which is the global income tax for the year 2013, the amount of KRW 325,197,830 of the global income tax for the year 2013 (including the additional tax for negligent tax returns, KRW 74,788,025,743 of the additional tax for negligent tax returns, and each of the above disposition of underreporting the amount of KRW 30(4).

D. On November 11, 2016, the Plaintiff filed an appeal against the instant disposition, and the Tax Tribunal dismissed the said appeal on May 19, 2017 (Evidence A4).

Facts without any dispute over recognition, Gap evidence 4, 5, Eul evidence 1-1, 2, Eul evidence 2 and 3, the purport of the whole pleadings.

2. The assertion and judgment

A. The plaintiff's assertion

The amount of the instant income is the amount received from the subcontractor in return for the examination of the estimate and management of subcontracted construction works ordered by BB development from the subcontractor, and the Plaintiff did not submit a global income tax return at the time due to being detained in the relevant criminal case, and did not commit any unlawful act, such as active concealment of income or fraudulent means, with respect to the instant income amount. The penalty tax rate of the instant disposition is subject to the general under-reported penalty tax rate (10%) rather than the unfair under-reported penalty tax rate (40%). As such, the portion exceeding the amount calculated by the penalty tax rate of 10%

B. Relevant statutes

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

C. Whether the instant disposition is lawful

1) Relevant legal principles

A) The main sentence of Article 47-3(2)1 (a) of the former Framework Act on National Taxes (amended by Act No. 12848, Dec. 23, 2014; hereinafter the same) provides that "in the event of underreporting part of the global income tax, etc. due to an unlawful act, the amount equivalent to 40/100 of the amount calculated by multiplying the calculated tax amount by the ratio of under-reported tax base due to such unlawful act (hereinafter referred to as "non-reported tax base") to the tax base by the calculated tax amount." According to Article 26-2(1)1 of the same Act, Article 12-2(1) of the Enforcement Decree of the same Act, and Article 3(6)1 (a) of the Punishment of Tax Evaders Act, the term "unlawful or other unlawful act" refers to an act falling under any of the subparagraphs of Article 3(6) of the Punishment of Tax Evaders Act, such as preparing an account book, such as making it impossible to prepare a false entry (such as income, profits, manipulation or omission of tax invoice, or omission, or omission of tax invoice.

B) As above, the term “unlawful act” refers to a deceptive scheme or other active act that makes it impossible or considerably difficult to impose and collect taxes, and thus, it does not constitute a mere failure to file a tax return or making a false tax return without accompanying any other act. However, in addition to the circumstances where active concealment intent appears, such as an act of not filing a tax return or underreporting, an act of not intentionally entering income or sales, etc. in the account book, a false entry in the account book, and a variety of accounts repeatedly used, it may be recognized as making it impossible or considerably difficult to impose and collect taxes (see, e.g., Supreme Court Decisions 2014Du2522, Sept. 15, 201; 2010Do1345, Mar. 24, 2011). Determination of whether active concealment of taxes can be objectively revealed should be made by comprehensively taking into account not only the basic account books stating income or sales, but also the method and method of filing a false tax return or the method of filing a false tax return, etc.

2) Determination

A) In light of the purport of the entire pleadings, the following facts may be acknowledged in the descriptions of Gap evidence Nos. 1 through 3, Gap evidence Nos. 5, Eul evidence Nos. 2 and 3.

(1) The Plaintiff received the instant income amount from the instant subcontractor in the following manner between 2013 and 2015.

The plaintiff was requested from BB development to prepare an implementation review document for each type of work that contains the amount of subcontract execution for each type of work required to refer to the calculation of the amount of subcontract for the construction project ordered by the CC, etc., and after receiving the "amount of subcontract execution" from the subcontractor in this case, the plaintiff prepared a "execution review document" in which BB development is filled out with the "amount of execution". The ○ BB development orders construction more than the amount actually required for the construction project by the CC, etc., the ordering agency, and the 'subcontract amount' is determined as higher than the amount of profit actually required by the subcontractor, and the 'subcontract amount' is determined as higher than the amount of profit actually required by the subcontractor.

The Plaintiff agreed to receive the difference between the subcontractor in this case and the 'construction cost received from BB development' from the above subcontractor and the 'the execution price agreed in advance with the Plaintiff by informing the subcontractor in advance of the 'the amount of subcontract' of the BB development, which the Plaintiff became aware of through the 'the execution review document'.

Pursuant to the above agreement, the Plaintiff received in cash all the instant income amount, "the remainder after subtracting expenses, etc. actually incurred in the construction from the subcontract construction cost that the above subcontractor received from BB development."

(2) On September 2, 2015, the Plaintiff was indicted for suspicion of violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) and occupational embezzlement, etc. (Evidence A) as the facts charged that the amount of the instant income owned by the victim BB was embezzled in the manner described in the above (1) at the Seoul 00 District Court.

(3) On January 29, 2016, the Seoul 00 District Court rendered a judgment of not guilty on the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement) and occupational embezzlement with the purport that the Plaintiff embezzled the victim BB development funds in relation to BB development, and sentenced the Plaintiff to a suspended sentence for three years (Evidence A2). The Plaintiff and the Prosecutor appealed both, and the Seoul High Court rendered a judgment of not less than five years to dismiss all the appeals filed by the Plaintiff and the Prosecutor on August 9, 2017 (Evidence A5).

B) Accordingly, the global income tax is a tax assessment method in which the Plaintiff, the taxpayer, voluntarily filed a tax base and tax amount, and thereby becomes final and conclusive. The Plaintiff used the amount of the instant income for private purposes, such as stock investment, living expenses, etc., and did not file a return on the said amount of income while filing and paying the global income tax in 2013 and 2014; ② the number of times the Plaintiff received the instant income from the instant collaborative entity reaches 21 times, and the total amount exceeds 3.5 billion won, ③ the Plaintiff was paid the instant amount of income by cash from the instant collaborative entity, and the Plaintiff did not issue a tax invoice on the instant amount of income to the said collaborative entity, making it difficult for the taxation authority to confirm the Plaintiff’s receipt of the instant amount of income; ④ The Plaintiff’s receipt of the instant amount of income in return for informing the instant collaborative entity of the amount of the subcontracted amount of income known to the Plaintiff in the course of its business to the instant collaborative entity, and in light of these circumstances, it is reasonable to deem that the instant collaborative entity also received or made a tax return on the instant amount of income tax evasion.

Therefore, since the tax base that the Plaintiff filed under-reported with respect to the instant income amount constitutes the under-reported tax base due to unlawful act, the Defendant’s disposition of this case is lawful in accordance with the main sentence of Article 47-3(2)1 (a) of the former Framework

3. Conclusion

The plaintiff's claim is without merit, and it is dismissed. It is so decided as per Disposition.