If it is found that the fact of taxation requirement is presumed in light of the empirical rule, it cannot be readily concluded as an unlawful disposition.

In light of the empirical rule, it is presumed that the Plaintiff’s taxation requirement is presumed that the purchase cost incurred in softening was included in the deductible expenses and that the input tax was deducted on the said cost by purchasing Dolet saws at the actual higher price and by making the difference paid to related companies and representatives.

Article 19 (Scope of Deductible Expenses)

2016Guhap62870 Revocation of Disposition of Imposing corporate tax, etc.

○○ Water Industry Co., Ltd.

○○ Head of tax office

September 1, 2017

September 29, 2017

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 181,580,370 (including additional taxes), corporate tax of KRW 1,680,275,610 (including additional taxes), corporate tax of KRW 1,685,610 (including additional taxes), value-added tax of KRW 1,220,384,860 (including additional taxes), and value-added tax of KRW 27,376,150 (including additional taxes) for the business year 2013 against the Plaintiff on October 12, 2015 shall be revoked in all.

1. Details of the disposition;

(a) AAAA ○○○○○ on January 31, 2012, which was established on March 23, 1993 and engaged in real estate leasing business, etc.; on January 31, 2012, AAAAA ○○○○○○ was established in detail in the Philippines; on the part of AAA ○○○○○○, a corporation located in Vietnam, made up of molets (forest wastes and lumbers, etc.) from a corporation located in Vietnam, and engaged in the business of importing and delivering clean molets, which were processed in the shape of an original pole within 40 meters in length and 1c meters in short, and then supplied them to a domestic power plant; on May 10, 2016, the Seoul Central District Court received a decision to commence rehabilitation procedures (2016 Gohap***) and appointed a custodian of the ○○○ Product Rehabilitation Co., Ltd. (hereinafter referred to as the “Plaintiff ○○○○ Debtor Co., Ltd.”).

B. The director of the Seoul Regional Tax Office denied the deduction of the corporate tax and the input tax deduction of the amount equivalent to the above difference on the ground that the Plaintiff paid the purchase price of the Dolet to AA Lighting (hereinafter referred to as "AA Lighting") and BB Track Co., Ltd. (hereinafter referred to as "B Track"), and the Plaintiff’s representative director, the Plaintiff’s corporate tax deduction of the corporate tax and the input tax deduction of the amount equivalent to the above difference on October 12, 2015, on the ground that the Plaintiff paid the difference to AAA Lighting, Inc. (hereinafter referred to as “affiliated companies”, hereinafter referred to as “AA Lighting Track”), and the Plaintiff’s corporate tax deduction of 181,580,373 won (including additional tax), the corporate tax for 2014, the value-added tax for 1,680, the value-added tax for 270, 2717 and 2714 (including additional tax for 20, 2716).7

C. On December 31, 2015, the Plaintiff filed a request for examination with the Commissioner of the National Tax Service, but was dismissed on February 12, 2016.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 1, 2 and 3 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) In the case of Dolet supply, the Plaintiff would be liable for maritime freight charges, insurance premiums, loading and unloading, import clearance charges, etc. up to two months from the date of receipt of the final price. When concluding a supply contract with AAAA ○○○ and CIF, the Plaintiff opened a letter of credit equivalent to the price of DU (inward DP) and made AAA ○○○ to receive the price of DU (inward DP) and immediately transfer the difference between DU (inward DP) price and CIF price from the Vietnam manufacturing company, and then made the Plaintiff transfer the difference between DU price and the DoU (inward DP) price to the Vietnam manufacturing company after deducting the fee, etc., and there was no fact that the Plaintiff unfilledd the cost of purchase of Dolet to the Plaintiff.

2) Meanwhile, AAA ○○ entered into a separate contract with Vietnames for the transit of customers in the region of East Asia, including Vietnam. On the other hand, the AA ○○ signed a separate contract with the manufacturing company of Vietnam, and the AA ○○ by dispatching the employees employed on the part of the Philippines from the Republic of Korea to the AA ○○○○○○ for the manufacturing company of Vietnam to secure the revenue route and customer, etc. of the friendly Dolet, including Vietnam, through the discharge of Vietnam, and thus, the AA ○○ received fees from the manufacturing company of Vietnam in return.

(b) Fact of recognition;

1) The status of ownership and management of shares of the Plaintiff, AAA ○○, and related companies

A) Of the Plaintiff’s shares, 70% of the Plaintiff’s shares is CC, 30% is Y, the wife of CC, and CC was working as representative director from April 25, 2003 to October 23, 2015.

B) AAA ○○ is a branch of the Plaintiff’s Philippines, and 60% of the shares is owned by CC. AAA ○○ was a nominal representative, but actually represented by the Plaintiff.

(C) 51% of the shares of BB merchant vessels is CC, 49% is YY, the wife of the CC, and the CC was in office as representative director from October 28, 2013 to February 26, 2014.

D) 9.22% of the AAS lamps’s shares are 9.22%, 6.56%, YYA, 34.86%, which are the wife of the CC, and YAS, are owned by the Plaintiff holding all of its shares, from March 31, 2009 to May 21, 2013, CC serves as the representative director from July 27, 2015, and thisY is serving as the auditor from May 21, 2007 to May 21, 2013, and from July 24, 2014 to July 27, 2015. However, Kim ○ was registered in the name of the representative director from May 21, 2007 to May 21, 2013, and was registered as the representative director from May 21, 2013 to July 27, 2015.

2) The Plaintiff imported Dolets from AAA ○○○, and filed an import and export declaration with AA ○○○ on the same content as the L/C was issued at the DU price, thereby including the DU price in the deductible expenses of corporate tax and receiving the deduction of the input tax amount of the value-added tax.

3) According to the e-mail that the Plaintiff exchanged with the U.S. ○○○○○○○○○○, a business entity manufacturing Vietnam, conducted direct communication with the Plaintiff without going through AAA ○○○○○○○○○, and the customer company’s name on the commission document prepared by the U.S. ○○○○○○○○○ (Evidence No. 21) indicated the Plaintiff as the Plaintiff. Under the premise that AAA ○○○○○○ was paid all the money received by the Plaintiff’s L/C opening without acquiring any separate e-mail, the Plaintiff agreed to receive money in excess of the actual price, such as commission or transportation expenses.

4) According to the Bricker contract concluded on November 7, 2013 between Hohovah and AAA Lighting, which was concluded on November 7, 2013, Hohovah entered into with AA ○○○○○, Hohsan paid the fee of 33 USD per ton of leletlets with the accounts of AA Mamping off within a week from that day when payments for each State shipment are completed.

5) The following two types of transactions are shown according to the details of commission, prepared and sent by the Plaintiff to the Plaintiff, and the price policy (○○○○○○○○○○○○○○○○○○○ (○○○ PEICY, No. 16), and the attached table of commission (LCet, No. 15, and No. 18).

A) In the case of Class A (P), the Plaintiff purchased 160 USD and Dolets per ton (116 USD and Dolets (LP) through AAAA ○○○, and paid 195 USD per ton both Class A and B at the purchase price, and some of the difference between the purchase price and the actual price is adjusted to BB Line account (A and B are 23 USD and 30 USD) as transportation cost, and some of them were paid to AAAA 200 USD account (A grade 5 USD and B are 33 USD per ton) as a fee, and the remainder was paid to BCC’s Vietnam account under special circumstances.

B) The Plaintiff purchased U.S.D. B(LP) 152 USD from U.S.O. ○○○○○○○, paid 185 USD per ton at the purchase price, and received 33 USD, which is the difference between the purchase price and the actual price, as a fee, from AAAS mpt’s account.

6) The main contents of this GG’s written answer and questioning protocol of the Seoul Regional Tax Office regarding which the Plaintiff manages funds are as follows.

The fee that ○ AA lamps was received from U.S. ○○○, Hoh Anh Magsan, etc. is the price that approximately two to three persons dispatched from AAA lamps performed their duties, such as physical color, items excavation, etc. for Hohsan. The details of personnel expenses settlement or dispatched employees are well-known for activities performed by the dispatched employees.

Since the Plaintiff and AAA Lighting were considered to be the same company, the fee received from AAA Lighting was also considered to be the same company's profit. The fee received from AA Lighting is written by the Plaintiff as the trade fund.

○○○ determined both the prices such as the bid price and import unit price of Dolet, and the Dolet P Dolet also determined by the AAA ○○ and the CCC.

7) The main contents of the e-mail sent by SS to the representative of the ○○○○○○○○, in charge of liaison with the local company of the Plaintiff are as follows.

○○ The difference between the CIF 172 USD and DUD 195 USD in Dolets will be regarded as transportation charges. Therefore, it would be legitimate for U.S. ○○○○○ to send 23 USD to the Plaintiff.

As a result of the discussion of the Plaintiff on the fee, the transport fee was reduced from 23 USD to 30 USD instead of the 30 USD.

8) The financial details paid by UNO○○○ to the Plaintiff’s affiliated companies and coordinationCC are as follows. (Omission)

9) Results of the disposition of the relevant criminal case

On April 2017, the director of the Seoul Regional Tax Office: (a) fabricated the purchase price of Dolets in 2013 and 2014, and received the difference between the actual purchase price and the personal account of the related parties and representativeCC; and (b) filed a complaint with the Plaintiff and ChoCC at the Seoul Western District Public Prosecutor's Office on charges of evading corporate tax of 37 million won for 2013 and corporate tax of 1154 million won for 2015 and corporate tax of 1154 million won; and (c) on June 16, 2017, the prosecutor of the Seoul Western District Public Prosecutor's Office did not enter the Republic of Korea after departure from the Republic of Korea, and issued a disposition of suspending prosecution against the Plaintiff and the witness.

[Ground of recognition] The partial entry of Gap evidence Nos. 5 and 6, Eul evidence Nos. 4 through 40 (including each number), the purport of the whole pleadings

C. Determination

1) Generally, in a lawsuit seeking the revocation of a tax imposition disposition, the burden of proving the fact of taxation requirements exists under a taxation authority. However, where it is proved that the fact of taxation requirements has been presumed in light of the empirical rule in the specific litigation process, unless it proves that the person liable for duty payment is inappropriate to apply the empirical rule, or that there are special circumstances to exclude the application of such empirical rule in the pertinent case, it cannot be readily concluded that the pertinent tax disposition is an unlawful disposition that does not meet the taxation requirements (see, e.g., Supreme Court Decisions 2002Du6392, Nov. 13, 2002; 2015Du60341, Jun. 10, 2016).

2) In full view of the following circumstances revealed by the fact that the Plaintiff is a person or recognized as the Plaintiff in light of the foregoing legal doctrine and the purport of the entire pleadings, it is presumed that the Plaintiff’s taxation requirement is to include the purchase cost in deductible expenses and to receive input tax deduction regarding the input tax amount by purchasing rums at a price higher than the actual value, and paying the difference to related companies and representatives in accordance with the empirical rule. On the other hand, the evidence presented by the Plaintiff and the Plaintiff alone are insufficient to acknowledge that there is a special circumstance to exclude the application of the foregoing empirical rule, and there is no other evidence to acknowledge it. Accordingly, the Plaintiff’

A) AAA ○○, AAA Lighting, and BB are both major shareholders of the Plaintiff’s representative director and companies de facto controlled as the actual representative.

B) Pursuant to the Bracker Agreement entered into with AA discharge, U.S. 3 USD or 5 USD for each ton of the Dolet was paid as a fee in accordance with the fee payment agreement. This merely appears to have been based on the consultation to pay a certain amount of the purchase price as a fee to AA.S. discharge, and there is no content as to what is the goods or services provided to AAA discharge to A.A. Ma○○○○○○ in return for the fee payment agreement, and it appears that the Plaintiff used most of the money in the name of the fee paid to AAA discharge account.

C) In light of the fact that U.S.D. and U.S. 23 U.S.D. agreed to increase transportation expenses from 23 U.S.D to 30 U.S.S.S.D instead of lowering transportation fees between the Plaintiff and U.S. ○○○○○○○○, even if transportation expenses are under the pretext of transportation, the substance appears to be the same as the above fee.

D) The sum of the difference between the price received through AAA ○○○ and the actual cost of transportation, excluding the fee and the transport cost as seen earlier, was paid directly to the Mediation Committee, a representative director of the Plaintiff. There is no way to explain the remainder to the Mediation Committee for purposes other than recovering the purchase price which is lower than the actual cost.

3) The Plaintiff asserts to the effect that, while entering into a contract with AAA ○○ under the terms of the CIF price, the Plaintiff issued a transportation invoice at the price of DU (DP) and received a refund excluding the difference between the CIF price and the charge for maritime fares, insurance premiums, loading and unloading, and customs clearance. However, it is difficult to accept for the following reasons.

A) In light of the relationship between the Plaintiff and AAAA ○○○, each entry in the evidence Nos. 7 and 8 alone is insufficient to recognize that the Plaintiff was responsible for the cost of maritime freight, insurance premium, loading and unloading, and customs clearance, and there is no other evidence to acknowledge it.

B) The difference between the DU (inward DP) price and the CIF price is merely 23 USD per ton. The amount paid by UNO○○○ to affiliated companies and CCC exceeds that.

C) Nice ○○○○ paid money to the Plaintiff rather than the Plaintiff’s related company’s personal account and mediationCC’s personal account, and some of them paid money directly to the Mediation Committee in cash.

4) The Plaintiff asserted that the Plaintiff was paid fees from U.S.○○○ in return for the fact that the Plaintiff dispatched an employee employed at the place of the Philippines to AAA ○○○○○ for the purpose of ensuring the revenue route of friendly trokes, such as Vietnam, etc., and its customers, etc., but it is insufficient to recognize that the Plaintiff’s partial statement, who is the Plaintiff’s employee, has dispatched AAA ○○○○, to the employees, and there is no objective evidence to acknowledge it, and even if the dispatched employee actually provided the service, there is no objective evidence to acknowledge it, and even if there is no objective evidence to acknowledge it, the Plaintiff did not accept the above assertion since it appears that the Plaintiff paid the price for the service provided by AAA ○○○○○ through AA ○○○○○ through the purchase price of the U.S. Ba Ba Ba oo, and the Plaintiff did not have to pay it to the AAA ○○○○○.

3. Conclusion

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

(c)