All appeals are dismissed.

The costs of appeal are assessed against each appellant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Plaintiff’s ground of appeal

A. Of the grounds of appeal Nos. 1 and 2, Article 93 subparag. 10 (a) of the former Corporate Tax Act (amended by Act No. 7838, Dec. 31, 2005; hereinafter the same) provides for “income generated from the transfer of stocks issued by a domestic corporation” as one of the domestic source income of a foreign corporation subject to corporate tax.

Meanwhile, the main text of Article 1 of the former Securities Transaction Tax Act (amended by Act No. 8838, Jan. 9, 2008; hereinafter the same) provides that “The securities transaction tax shall be imposed on a transfer of stock certificates.” Article 2(3) defines the meaning of “transfer” as “transfer of ownership at cost by contract or legal cause.”

Whether the transfer of shares issued by a domestic corporation, which is extinguished by a merger between foreign corporations, to a merged corporation surviving a merger, constitutes “transfer of shares” under Article 93 subparag. 10 (a) of the former Corporate Tax Act should be determined by the interpretation of the former Corporate Tax Act, on the ground that the transfer of the shares in question resulting from the merger, the increase in the value of the shares in question, as a result of the merger,

However, in the case of a domestic corporation, Articles 80(1) and (4) and 16(1)5 and (2) of the former Corporate Tax Act, and Articles 122(1) and 14(1)1(a) and (c) of the former Enforcement Decree of Corporate Tax Act (amended by Presidential Decree No. 19328, Feb. 9, 2006; hereinafter the same), deeming that the transfer of assets following a merger constitutes the transfer of assets for which gains on transfer are realized, the method of calculating gains on transfer is prescribed, and exceptionally, Article 44 of the former Corporate Tax Act.