Seoul High Court-2014-Nu-5016 ( December 03, 2014)

Whether to provide double support for tax benefits may be applied simultaneously with tax reduction or exemption if separate accounts are kept based on the place of business.

In light of the purport of each provision of the Restriction of Special Taxation Act, whether tax benefits are duplicate support shall be determined not by a national or a resident but by a place of business. Thus, if each place of business is kept separately within the same taxable business year, tax reduction and tax credit may be applied simultaneously

Article 127 (Elimination of Overlapping Assistance) of the former Restriction of Special Taxation Act

2014Du4762 Revocation of Disposition of Imposing corporate tax

O Co., Ltd.

OO Head of the tax office

Seoul High Court Decision 2014Nu55016 Decided December 3, 2014

May 14, 2015

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. Article 127(4) of the former Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 27, 2010; hereinafter the same) provides that "a national may select only one of the cases where income tax or corporate tax is reduced or exempted pursuant to Article 5, 11, 24, 25, 25-2 through 25-4, 26, 30-4, 32(4), 33-2, 63, 63-2(2), 64, 66 through 68, 85-6, 121-8, 121-9(2) or 121-17(2) and where income tax or corporate tax is reduced or exempted pursuant to Article 5, 11, 24, 25, 25-2 through 25-4, 26, 94, 104, 101-14 or 20-14.

B. citing the reasoning of the judgment of the first instance court, the lower court acknowledged the Plaintiff’s tax reduction or exemption under Article 63-2(2) of the former Restriction of Special Taxation Act for the following business years: ① (a) the Plaintiff moved AA factory located outside the Seoul Metropolitan area from 2005 to BOE andCCOOO located outside the Seoul Metropolitan area (hereinafter referred to as “a relocated factory to a local area”); (b) the Plaintiff applied tax reduction or exemption under Articles 11, 24, 25-3, 26, 104-14, and 15 of the former Restriction of Special Taxation Act to a relocated factory at the same time when it filed corporate tax return for each business year from 2005 to 206; and (c) the Defendant received the Plaintiff’s tax reduction or exemption under Article 127(4) of the former Restriction of Special Taxation Act for the following business years: (a) the Plaintiff was subject to the tax reduction or exemption under Article 36(4) of the same Act; and (b) the Plaintiff’s tax reduction or exemption of corporate tax for each business year after 2007.

Next, the lower court determined that the provisions of Article 127(2), (3), (5) and (6) of the former Restriction of Special Taxation Act provide that each provision of Article 127(2) shall be determined on the basis of investment assets or places of business, etc. other than a national or resident; ② Article 127(4) of the former Restriction of Special Taxation Act provides that “in cases where income tax or corporate tax is reduced or exempted under Article 6, etc. of the former Restriction of Special Taxation Act, Article 5 shall not apply.” However, the lower court determined that the separate accounting provision of Article 127(3) of the former Restriction of Special Taxation Act provides that “if a national can be applied at the same time to the same taxable year, only one of them shall be applied to the same business as those eligible for tax reduction or exemption, and it cannot be deemed that the separate accounting provision of Article 127(4) of the former Restriction of Special Taxation Act provides that the same shall not apply to the remaining business subject to tax reduction or exemption for each of Article 27(3) of the former Restriction of Special Taxation Act.

C. Examining the records in light of the above provisions and related legal principles, such determination by the court below is just, and contrary to what is alleged in the grounds of appeal, it did not err by misapprehending the legal principles on interpretation of Article 127(4) of the former Restriction of

2. Regarding ground of appeal No. 2

Examining the reasoning of the lower judgment in light of relevant provisions and records, the lower court is justifiable to have determined that the Plaintiff managed the accounts separately for the relocated factories subject to tax reduction or exemption and the remaining businesses subject to tax credit, and contrary to what is alleged in the grounds of appeal, the lower court did not err by recognizing facts in violation of logical

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.