The amount of issue can not be considered as entertainment expenses and constitutes sales incidental expenses.

The purpose of paying the controversial amount is to promote the smooth progress of transaction relations by promoting friendship among business parties, and the fact that the amount was paid to the owner of a ship who is not a shipping company, the direct counter-party to the transaction, cannot be viewed as entertainment expenses. Therefore, the key amount is the sales incidental expenses.

Article 19 (Scope of Deductible Expenses)

2015Guhap20269 Revocation of Disposition of Corporate Tax Imposition

AAA Corporation

○○ Head of tax office

May 29, 2015

July 3, 2015

1. On October 2, 2012, the Defendant’s imposition of corporate tax on the Plaintiff for the business year 2007, each of the imposition of ○○○○, ○○○○, ○○○○, 2008 corporate tax for the business year 2009, ○○○○, 2009 corporate tax for the business year 2010, ○○○, ○○, and ○○, and ○○, 201 corporate tax for the business year 2011, shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff was a corporation that manufactures and sells vessel equipment such as a remote valve control system for vessels to a shipbuilding company. The Plaintiff supplied products to a shipbuilding company under the condition that the shipowner approves the shipowner, paid to the shipowner the amount calculated by a certain ratio of the supply price (hereinafter referred to as “market price”) to the shipowner, and filed a corporate tax by appropriating it to the payment fee account as the cost.

B. The director of ○○○ Regional Tax Office conducted a consolidated investigation of corporate tax against the Plaintiff, and deemed the key amount to be an honorarium paid to a specific owner, and notified the Defendant of the amount exceeding the limit of entertainment expenses by non-Inclusion in deductible expenses and imposing corporate tax on the Plaintiff. Accordingly, on October 2, 2012, the Defendant imposed ○○○○ and ○○○○○○○ upon the Plaintiff as indicated in the following table (hereinafter “instant disposition”).

C. The Plaintiff appealed and filed an appeal with the Tax Tribunal on October 31, 2014, but dismissed the appeal.

was well-established.

[Ground of recognition] Unsatisfy, Gap evidence 2 and 3 (which has a serial number)

(E) Nos. 1 and 2 of evidence, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The key issue amount is that the plaintiff's supply of the product subject to the prior approval to the shipbuilding company with the prior approval of the shipowner constitutes a part of the prior approval items presented to the prior owner along with the product estimate in order to obtain the prior approval, and has a direct impact on the selection of the prior approval parts. Therefore, it is related directly to the sale of the product, which is a sales incidental cost, which contributes to the realization of the plaintiff's profits, and is different from the entertainment expenses paid for smooth

Fees provided to the owner of a ship is naturally paid to the shipbuilding company for the purpose of supplying the products subject to the approval of the owner of the ship to the shipbuilding company, and the customary cost is generally accepted in the shipbuilding industry. The manufacturer of the ship's equipment and materials presents the terms and conditions of the price, etc. in advance as a bidding condition in order to be selected as the supplier, and the supply of the vessel is confirmed according to the selection of the owner, the owner and the manufacturer shall prepare the vessel benefit contract between the owner and the manufacturer and pay the owner the fees as presented. The payment of the fees shall be executed with the plaintiff's ordinary fund in accordance with the request of the owner of the vessel and shall be accounts for the fee account as normal expenses. Thus, the key amount shall be deemed to be included in deductible expenses as expenses within the ordinary scope generally accepted as being paid in connection

B. Relevant statutes

It is as shown in the attached Form.

(c) Summary of the transaction process of supplying ship equipment and materials;

1) In the case of certain machinery and materials, after receiving a written estimate from a manufacturer to supply the vessel equipment and materials required for manufacture of the vessel, a shipbuilding company is supplied with the vessel owner with the product that the vessel owner approves by notifying the estimate to the vessel owner.

2) The reason why a shipbuilding company receives the supply of vessel equipment and materials and obtains the approval of the shipowner is that, while the important equipment and materials of a vessel have a substantial impact on the performance and durability of the vessel, the warranty period (one to two years from the date of delivery of the vessel) for the vessel of a shipbuilding company is shorter than the warranty period (one to two years from the date of delivery of the vessel). Therefore, it is hard to determine that a shipowner has an option for the important equipment and materials

"3) In supplying a product to a shipbuilding company as above, in addition to sending a quotation to a shipbuilding company, if the vessel owner provides the vessel owner with the details of the vessel benefit consisting of the provision of a service charge at a certain rate of sales, the provision of spare parts, the extension of the warranty period, etc., after consultation with the vessel owner, the vessel owner shall determine the product to be finally purchased by taking into account the estimate of the product delivered by the shipbuilding company and the details of the vessel benefit received from the manufacture, and notify the shipbuilding company of the final purchase. The vessel owner shall dispatch an order for the manufacture of the product determined by the vessel owner to enter into a contract for the manufacture and supply of the product; hereinafter referred to as " 4) The vessel owner shall prepare the vessel benefit contract between the vessel owner and the vessel owner with the content of the vessel owner, and include the vessel owner's fees in the account at the request of the vessel owner's account, and then include the purpose of the entire set forth in Gap's statement in Gap's account [3].

D. Determination

1) In full view of the contents, form, and purport of Articles 19 through 28 of the former Corporate Tax Act (amended by Act No. 11128, Dec. 31, 201; hereinafter referred to as the “Act”), and Article 19 of the Enforcement Decree of the Act, the Act and the Enforcement Decree do not stipulate the scope of deductible expenses upon completion of the scope of deductible expenses, but examples of the scope thereof.

In principle, the amount of losses incurred from transactions that reduce the net assets of a corporation is included in the calculation of losses and deductible expenses as a special provision.

Unless otherwise listed in law or enforcement decree as non-deductible expenses, it shall be deemed as deductible expenses.

The Supreme Court Decision 2008Du7779 Decided June 23, 2009 (see, e.g., Supreme Court Decision 2008Du7779, Jun. 23, 2009). Accordingly, in a lawsuit seeking revocation of the imposition of corporate tax, where the cost of a certain item is not included in deductible expenses, or it does not constitute deductible expenses under Article 19(1) and (2) of the Act, the tax authority having the burden of proving that the expense falls under any of the items of non-deductible expenses prescribed in Articles 19-2 through 2

In addition, in light of the language and purport of Article 25(1) and (5) of the Act, if the corporation's expenses are for business and the other party is for business-related persons and the purpose of expenditure is to further promote friendship among business-related persons through activities such as entertainment, the expenses shall be deemed entertainment expenses. However, the expenses that the corporation spent in direct connection with the profits shall not be readily concluded as entertainment expenses (largely).

Court Decision 2010Du14329 decided September 27, 2012

2) In light of the above legal principles, in light of the following circumstances, which can be recognized by comprehensively considering the evidence and the purport of the entire pleadings as seen earlier, the purpose of paying the key amount is to promote smooth progress in transactional relations by enhancing friendship between business parties. The mere fact that the key amount was paid to the owner of a ship who is not a shipping company directly the other party to the transaction cannot be deemed as entertainment expenses. Ultimately, the key amount constitutes a sales unit expense, and therefore, the disposition of this case was unlawful on the premise that the key amount constitutes entertainment expenses.

① As seen earlier, the vessel owner entered into a contract with the vessel owner for the benefit of vessel owner as a result of the need to directly ask the vessel owner to the manufacturer of important vessel machinery and materials for warranty liability, and there is an economic rationality in concluding the contract, and there is no reason to deny its validity. Moreover, obtaining approval through negotiations with the vessel owner in order to supply vessel machinery and materials seems to be practices in the vessel supply industry.

(2) The shipowner benefit contract is a contract that prescribes the details of warranty liability for defects in vessel equipment, and cash paid based on the shipowner benefit contract may be deemed the advance payment of defect repair expenses.

3. The main benefits, including the key amount, constitute commercial practice as seen earlier, and in the event of not paying the key amount to overseas ship owners, sales to ship owners are difficult, which constitutes the expenses directly related to the sales of goods or products.

④ The key issue amount is that a prior owner is not paid under the prior benefit contract between the Plaintiff and the prior owner, and thus, can demand the performance of the obligation. Therefore, it is reasonable to deem that the payment constitutes not merely a benefit or honorarium but a cost obligated to pay.

⑤ In light of the fact that corporate tax should be imposed on net income according to the tax-bearing capacity, regardless of whether it is prohibited under other Acts, it is reasonable to recognize the inclusion of expenses in deductible expenses even if the expenses or expenses per se spent to obtain illegal income are illegal (see Supreme Court Decision 2008Du7779, supra), barring special circumstances such as extremely contrary to social order, etc. (see Supreme Court Decision 2008Du7779, supra). It is difficult to see that the payment of cash or fees to the owner in accordance with the prior benefit contract is unlawful in its expenditure itself or it is against social order.

3. Conclusion

If so, the plaintiff's claim is justified.