Review Division 2010-0198 ( December 06, 2010)

Since the land and buildings are purchased and the business is operated in common, it constitutes a taxpayer with joint and several liability for tax payment.

Since the Plaintiff agreed to divide the land and buildings in the location of the place of business into the registered co-ownership of the registered co-ownership and to operate the instant place of business in a de facto marital relationship, the Plaintiff constitutes a joint business proprietor with a joint tax liability, as well as a joint proprietor of a joint proprietor of a joint proprietor’s business by purchasing the land and buildings in a de facto marital relationship.

Article 2 of the Value-Added Tax Act

2011Revocation of revocation of the imposition of value-added tax

XX

Head of the tax office

July 6, 2011

August 24, 2011

1. The part of the instant lawsuit seeking revocation of imposition of local income tax pro rata to income tax shall be dismissed.

2. The plaintiff's remaining claims are dismissed.

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

The Defendant’s disposition against the Plaintiff on July 1, 2010, global income tax of 2005 KRW 20,348,810, global income tax of 203,670, global income tax of 2,034,380, global income tax of 2006, global income tax of 1,424,360, local income tax of 207, global income tax of 2,750,100, global income tax of 275,010, local income tax of 275,010, global income tax of 275,010, and value-added tax of 15,521,340, global income tax of 205, value-added tax of 16,134,620, value-added tax of 205, value-added tax of 5,234,730, value-added tax of 1 year 206, 206, 2074,2967.

1. The process of the instant disposition

A. From October 1, 1998, the Plaintiff, in a de facto marital relationship with the formerA, has registered the business of the ○○ craft located in the Dong-gun, Busan-gun, Busan-gun, and has operated the sales business of the ○○ craft goods. On December 28, 2006 (However, until December 7, 2006, the registration of the business was changed to the Plaintiff’s sole name until December 8, 2006). On January 3, 2007, the Plaintiff continued to operate the sales business of the non-commercial goods in the name of the formerA at the same place as on January 3, 2007, where the formerA’s sole name was registered (hereinafter referred to as “the instant business place”).

B. However, the Plaintiff and the formerA omitted sales of KRW 1,603,066,610 at the value-added tax return filed from January 1, 2005 to June 30, 2007 on the instant business establishment.

C. During the above period of time, the Defendant: (a) deemed that the instant workplace was jointly managed by the Plaintiff and the previous AA as a equal share; and (b) deemed that the sales revenue and income were jointly reverted to the Plaintiff; and (c) rendered the instant disposition that, on July 1, 2010, the Plaintiff, who is jointly and severally liable for joint and several tax payment, received the claim amount equivalent to the total amount of the claim from the Plaintiff, which is jointly and severally liable for joint and several tax payment; and (d) issued the instant disposition that corrected and notified the claim amount equivalent to half (50%) of the income tax (including each additional tax and local income tax) on

[Ground of recognition] Facts without dispute, Gap 1, 2 evidence, Eul 1 to 4 evidence (including each number; hereinafter the same shall apply), the purport of the whole pleadings

2. Determination on this safety defense

According to Article 177-4(1), (2), and (5) of the former Local Tax Act (amended by Act No. 8864 of Feb. 29, 2008), resident tax to be imposed (applicable to local income tax-sharing local income tax under the current Local Tax Act) is a local tax to be paid to the head of a Si/Gun/Gu having jurisdiction over the place of payment of income tax. If the head of a tax office collects income tax by the method of assessment and notice in accordance with the Framework Act on National Taxes or the Income Tax Act, even if the resident tax-sharing local tax is imposed and collected by the method of assessment and notice in accordance with the correction, determination, etc. under the Framework Act on National Taxes, it appears that the head of a Si/Gun/Gu has imposed and notified the resident tax-sharing local tax, and thus, the defendant seeking the revocation of the disposition of taxation shall be the head of

Therefore, the part seeking revocation of imposition of local income tax among the lawsuit of this case is unlawful as it is against a person who is not qualified as the defendant.

3. Whether the imposition of value-added tax and global income tax is legitimate in the instant disposition

A. The plaintiff's assertion

The instant workplace is operated by the formerA independently notwithstanding its registration title, and even if not, at least after the Plaintiff’s liquidation of a de facto marital relationship with the formerA on December 28, 2006, withdraws from the same trade relationship after the closure of such a de facto marital relationship with the latter, and thus, the disposition imposing the value-added tax and the global income tax in this case is unlawful as it violates the principle of substantial taxation.

B. Determination

(1) Article 14(1) of the former Framework Act on National Taxes (amended by Act No. 911, Jan. 1, 2010) provides for the principle of substantial taxation by stipulating that if the ownership of income, profit, property, act, or transaction subject to taxation is merely nominal and a person to whom such income, profit, property, act, or transaction belongs is separate.

(2) At the time of investigating the instant place of business conducted around April 2010, the Plaintiff prepared and submitted to the Defendant a written confirmation that the Plaintiff had operated the instant place of business jointly with the formerA. On May 10, 2003, the Plaintiff and the formerA acquired approximately 000 square meters of the Dong-gun, Busan-gun, Busan-gun, the site of the instant place of business, and registered the co-ownership of each 1/2 share of the land. The ○ craft and the Do-dong, Busan-gun, as the place of business operating the instant place of business, opened the Do-dong-gun, Do-dong-gun, after the closure of the ○○ craft and the Do-dong-gun, the Plaintiff continued to operate the Do-dong-gun, Do-dong-dong, Do-dong, without any dispute between the Plaintiff and the Plaintiff and the said place of business during the period of 30 years prior to the opening of the ○ craft and the said place of business. The Plaintiff agreed to recognize the instant co-ownership share of the Plaintiff and the said place of business.

(3) Therefore, the imposition of the value-added tax and global income tax in this case is lawful, and the Plaintiff’s assertion is without merit.

4. Conclusion

Therefore, the part of the lawsuit of this case seeking revocation of imposition of local income tax portion among the lawsuit of this case is unlawful, and thus, the remaining claims are dismissed as it is without merit.