Seoul Administrative Court-2016-Gu Partnership-83054 ( November 10, 2016)

The latter part of Article 5(1) of the Protocol 2 to the Korea-China Tax Treaty shall be deemed to be 10% of the tax rate subject to the tax credit.

The purport of the Korea-China Tax Treaty stipulating the differential limited tax rates is to provide benefits to companies which have invested more in China by applying a relatively lower tax rate, and to uniformly consider the tax rate subject to the tax credit as 10%, thereby preventing unreasonable tax benefits.

Article 57 (Foreign Tax Credit)

2016Nu7871 Revocation of revocation of revocation of corporate tax rectification

Appellant and Appellant

AAA Corporation

- Appellants

BB Director of the Tax Office

Seoul Administrative Court Decision 2015Guhap83054 decided November 10, 2016

April 13, 2017

October 12, 2017

1. The plaintiff and the defendant's appeal are dismissed.

2. The costs of appeal shall be borne by each party.

1. Purport of claim

Defendant on January 6, 2015, KRW 000, corporate tax for the business year 2010, 2011 for the Plaintiff

00 won of corporate tax for the business year and 000 won of corporate tax for the business year 2012, each rejection of correction

All parts shall be revoked.

2. Purport of appeal

A. Plaintiff: The part against the Plaintiff in the judgment of the first instance is revoked. The Defendant against the Plaintiff on January 6, 2015

The rejection of correction of corporate tax of KRW 000 for the business year 2010 shall be revoked.

B. Defendant: The part against the Defendant among the judgment of the first instance court is revoked, and the Plaintiff corresponding to the revoked part is revoked.

The claim is dismissed.

1. Quotation of judgment of the first instance;

The reasoning of this Court’s ruling is as follows, except for the dismissal or addition of some content:

As such, Article 8(2) of the Administrative Litigation Act, the main text of Article 420 of the Civil Procedure Act is the same as the grounds for the judgment of the court.

this shall be quoted.

Parts to be removed or added.

○ The third 5-6 of the judgment of the first instance court, “the plaintiff is pending in this court by filing a lawsuit seeking the revocation of the instant order for rectification in accordance with 2015Guhap71822 of this Court,” which read “the plaintiff is pending in this court.”

Ulsan Administrative Court 2015Guhap71822, filing a lawsuit seeking revocation of the instant increased disposition

on July 20, 2017, a favorable judgment was rendered by the Defendant, and the Defendant appealed and appealed 2017Nu68600.

under this title is pending in the court."

○ The third part of the judgment of the first instance court is "the agreement of this case" as "the Korea-China Tax Treaty of this case".

○ The following are added to the 7th sentence of the first instance judgment. 8th sentence.”

If a foreign-invested company does not apply tax credit to the difference between the limited tax rate of 5% under Article 10(2)(a) of the Korea-China Tax Treaty and the 10% tax rate under the latter part of Article 23(3) of the Korea-China Tax Treaty, which is replaced by Article 5(1) of the Protocol, with regard to the difference between the limited tax rate of 5% under Article 10(2)(a) of the Korea-China Tax Treaty and the 10% tax rate under the latter part of Article 23(1) of the Korea-China Tax Treaty, each of the above provisions shall apply 5% to a company which directly holds 25% or more of the shares of its subsidiaries from among investment companies in foreign countries, and it is difficult to reasonably explain the purport of Article 23(3) of the Korea-China Tax Treaty to apply the above limited tax rate of 10% to the remaining companies.

○ The 6-7th of the first instance judgment of the court of first instance is “reasonable,” and the following is added:

The term "legal provisions" under the first sentence of Article 5 (1) of the Protocol No. 2 shall be deemed to be legal.

"provisions'라고 되어 있고, 이 사건 한중조세조약 제23조 제1항 가목은 중국 국내법을", "'the laws of China'로, 조약을 'Agreement'로 각 규정함으로써 위 '법률규정'과 달리", "표현하고 있는바, 위 '법률규정(legal provisions)'은 중국의 국내법만을 한정하는 것이",아닌 '조약'도 포함하는 보다 포괄적인 개념으로 해석할 수 있으며,

○ The following shall be added to the 13th sentence of the judgment of the first instance.

In addition, the defendant's subsequent inquiry relationship with Article 5 (1) of the Protocol No. 2 of this case

The requirements for the application of the deemed foreign tax credit system are applicable, and the latter part satisfies the requirements of the specialist.

this article argues to the effect that such provision is a provision on the application effect of the case.

It is difficult to find any particular ground that should be asked, which is a subsequent inquiry, "for the purposes of this paragraph".

해당하는 영어 원문인 "For the purpose of this paragraph 부분에도 맞지 않는 주장

Therefore, the Defendant’s above assertion is difficult to accept.

2. Conclusion

If so, the judgment of the court of first instance is legitimate, and the appeal of the plaintiff and the defendant is groundless, and all of them are without merit.

each subparagraph.