The provisions on self-farmland reduction and exemption cannot be applied to the plaintiff as a non-profit domestic corporation.

The provisions of Article 92 of the Income Tax Act apply mutatis mutandis to the return of tax base on the transfer income of assets of non-profit domestic corporations are merely the same as the transfer income tax and the calculated tax amount to induce early bona fide return, which do not correspond to the transfer income tax imposed on an individual, and the self-employed farmland reduction or exemption provided only to an individual cannot be applied.

Article 69 of the Restriction of Special Taxation Act, Article 62-2 of the Corporate Tax Act

2015Guhap71458 Revocation of Disposition of Imposing Corporate Tax, etc.

AAC AAA species

BB Director of the Tax Office

September 6, 2016

December 6, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition disposition of KRW 549,80,984,000 on February 2, 2015 exceeds KRW 549,803,067 among the imposition disposition of KRW 644,231,067 on the Plaintiff of the business year 2009 and the imposition disposition of KRW 20,984,00 on the special rural development tax shall

1. Details of the disposition;

A. On September 11, 2009, the Plaintiff obtained approval from the director of the tax office as an organization deemed a corporation pursuant to Article 13(2) of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter the same).

B. On September 15, 2009, the Plaintiff sold to the Korea Land and Housing Corporation the land of 11 lots, including DD 495-2, 960 square meters prior to DD 495-2, 648, 522 square meters prior to DD 649, 334 square meters prior to 651, and 509 square meters prior to 651, equal to DD 49, in accordance with the procedures for consultation prescribed by the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (hereinafter “instant farmland”).

C. On November 30, 2009, the Plaintiff reported and paid the transfer income tax on the above 11 parcel of land sold to the Defendant to the Korea Land and Housing Corporation. At the time, the Plaintiff applied the provision on reduction and exemption of transfer income tax on the farmland of this case under Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 201; hereinafter the same).

D. On February 2, 2015, the Defendant: (a) deemed that the Plaintiff constitutes a non-profit domestic corporation, and thus, the provision on reduction or exemption of capital gains tax for self-owned farmland under Article 69 of the former Restriction of Special Taxation Act, which applies to a resident, cannot be applied; (b) denied tax reduction or exemption under the said provision; (c) adjusted corporate tax amount for business year 2009 from KRW 549,803,067 to KRW 64,231,067 (including additional tax); and (d) imposed special rural development tax amount of KRW 20,984,00 (including additional tax) by applying the provision on reduction or exemption of capital gains tax for land, etc. for public-service business under Article 7

E. On April 29, 2015, the Plaintiff filed a request for review of each of the instant dispositions, and the Commissioner of the National Tax Service rendered a decision to dismiss the Plaintiff’s request on September 11, 2015.

Facts that there is no dispute over recognition, Gap Nos. 1, 2, 3, 4 (including both family identification cards and family identification cards), Eul evidence No. 1, and the purport of the whole pleadings.

2. Determination on the legitimacy of the instant disposition

A. Summary of the plaintiff's assertion

Article 62-2(5) of the former Corporate Tax Act (amended by Act No. 9898, Dec. 31, 2009; hereinafter the same) provides for the special taxation for the transfer income of assets of a non-profit domestic corporation by applying mutatis mutandis Article 93 of the former Income Tax Act (amended by Act No. 9897, Dec. 31, 2009; hereinafter the same). Article 93 subparag. 2 of the former Income Tax Act provides that the amount of tax for the transfer income of assets shall be calculated by deducting any amount of tax to be reduced under Article 90 of the same Act. Article 90(1) of the former Income Tax Act provides that the amount of tax for the transfer income of a non-profit domestic corporation shall be reduced when there is any amount of tax reduced or exempted under Article 90 of the same Act. Thus, Article 69(1) of the former Restriction of Special Taxation Act, which provides for the reduction or exemption of the transfer income tax for

Since FF, the representative of the Plaintiff as farmland under the Farmland Act, was directly cultivated from 1970, the disposition of this case, which did not apply the reduction or exemption of corporate tax against the Plaintiff, should have been applied mutatis mutandis by Article 69(1) of the former Restriction of Special Taxation Act, was unlawful.

B. Relevant statutes

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

C. Determination

1) In light of the principle of no taxation without law, or the requirements for tax exemption or exemption, the interpretation of tax laws shall be interpreted as the text of the law, barring any special circumstances. It is not allowed to expand or analogically interpret without reasonable grounds, and in particular, it accords with the principle of fair taxation to strictly interpret the provisions that can be seen as clearly preferential provisions among the requirements for tax exemption or exemption (see Supreme Court Decision 2003Du7392, May 28, 2004).

2) Article 62-2 of the former Corporate Tax Act, where a non-profit domestic corporation has any income accruing from the transfer of assets such as land, may choose not to file a return of the tax base, notwithstanding the provisions of Article 60 (1). In this case, the income for which no return of the tax base is filed shall not be included in the calculation of the income amount for each business year under Article 14 (1) and the amount calculated by applying the tax rates under each subparagraph of Article 104 (1) of the Income Tax Act mutatis mutandis to the tax base calculated by applying the provisions of Article 92 of the same Act (paragraph (2) and paragraph (2) shall be paid as the corporate tax (hereafter referred to as "transfer value" in this Article). In applying the provisions of Article 92 of the same Act, the provisions of Article 95 (2) and Article 103 of the Income Tax Act shall apply mutatis mutandis to the calculation of the income amount accruing from the transfer of assets (hereafter referred to as "transfer marginal profits") and the provisions of Article 95 (3) and (10) of the former Act shall apply mutatis mutandis to the calculation of the tax base.

As such, the legislative intent of Article 62-2 of the former Corporate Tax Act is to pay corporate tax under Article 14 of the former Corporate Tax Act for the income of a corporation from the transfer of real estate, but in the case of a non-profit domestic corporation that has no business income such as a clan, it lacks the ability to implement all tax-related procedures, such as not having a proper account book, etc., so in order to simplify tax payment procedures and induce early return, the amount calculated pursuant to Articles 92 and 104(1) of the former Income Tax Act, which is a provision on the calculation of capital gains tax, shall be opened

However, the corporate tax on the transfer of land, etc. of a non-profit domestic corporation like the plaintiff is calculated by the same method as the calculation method of the transfer income tax in principle by applying the relevant provisions of the former Income Tax Act to the calculation method of the transfer income tax, and thus, it does not constitute the transfer income tax imposed on a resident or a non-resident who has domestic source income.

3) Each of the above provisions of the former Corporate Tax Act provides that Article 92 of the former Income Tax Act shall apply mutatis mutandis to the tax base; Article 104(1) of the same Act to the tax rate; Article 95(2) and Article 103 of the same Act to income deduction; Article 96 to necessary expenses; Article 97 to the calculation of gains on transfer; and Article 100 to the calculation of gains on transfer; however, there is no express provision that Article 90 of the former Income Tax Act, which provides for the reduction of and exemption from capital gains tax, or Article 69(1) of the former Restriction of Special Taxation Act, which provides for the reduction of and exemption from capital gains tax on self-farmland, does not apply mutatis mutandis to the tax base; therefore, Article 90 of the former Income Tax Act or Article 69(1) of the former Restriction of Special Taxation Act

Article 93 of the former Income Tax Act, which applies mutatis mutandis under Article 62-2 (5) of the former Corporate Tax Act, provides that "if there is any amount of tax to be reduced or exempted under Article 90, the determined amount shall be calculated by deducting such amount of tax." However, Article 62-2 (5) of the former Corporate Tax Act shall be deemed to apply mutatis mutandis to the order in the calculation of tax amount as prescribed by Article 93 of the former Income Tax Act. Therefore, Article 90 of the former Income Tax Act, which applies mutatis mutandis to reduction

4) Even if Article 90 of the former Income Tax Act is applied mutatis mutandis again, corporate tax shall not be deemed reduced or exempted on the corporate tax following the transfer of the farmland in this case by the provisions of Article 69(1) of the former Restriction of Special Taxation Act. This is because Article 69(1) of the former Restriction of Special Taxation Act provides that the tax amount equivalent to 100/100 of the transfer income tax on the income accrued from the transfer of land prescribed by the Presidential Decree, among the land which is subject to the taxation of agricultural income tax, which is directly cultivated by the resident prescribed by the Presidential Decree who resides in the location of the farmland for not less than eight years, shall be reduced or exempted. Article 2(1)1 of the former Restriction of Special Taxation Act provides that "national" means a resident under the Income Tax Act and a domestic corporation under the Corporate Tax Act, and Article 1(1)1 of the former Income Tax Act provides that a non-profit domestic corporation shall be an individual who has a domicile in the Republic of Korea or has a residence for not less than one year.

5) Therefore, the Plaintiff’s assertion against this is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.