The early trial 2015-west-5470 ( February 11, 2016)

The disposition of this case to which the notice unit price for transactions between affiliated companies is applied shall not be subject to the application of the regulation of denial of calculation of unfair practices (pat

In the transaction between affiliated companies, the notice unit price is applied to the transaction between affiliated companies, and the transaction between non-affiliated companies, which is subject to the rejection of unfair calculation. However, the provision on rejection of unfair calculation cannot be applied because the transaction between affiliated companies and non-affiliated companies is the same or similar transaction.

Article 52 (Dispudiation of Wrongful Calculation)

2016Guhap62658 Demanding revocation of disposition imposing corporate tax, etc.

00 Stock Company

00. Head of tax office

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on October 24, 2017

on October 21, 2017

1. The Defendant’s imposition of corporate tax of KRW 1,332,94,820 and special rural development tax of KRW 162,249,70 for the business year 2009 against the Plaintiff on March 5, 2015 (including additional tax) shall be revoked in entirety.

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 is an affiliated company belonging to an enterprise group that is a holding company that is a holding company. The Plaintiff is also an affiliated company belonging to an enterprise group SPC Co., Ltd. (hereinafter referred to as “SPC”) and is also in the position of a related party as prescribed by Article 87(1)7 of the Enforcement Decree of the Corporate Tax Act, as the Plaintiff and the Plaintiff are affiliated companies belonging to the enterprise group SPC. The Plaintiff is an affiliated company that manufactures and sells petroleum and chemical products. The Plaintiff is an enterprise that manufactures and sells petroleum and chemical products, and the SPC is an IT-form service company that supports the construction plan and operation strategy, system design, development, and operation of the information technology system.

B. Around December 1998, the Plaintiff entered into a service contract for the establishment and operation of an information system (hereinafter “instant contract”). From January 1, 1999 to December 31, 2009, the service period was from January 1, 2009 to December 31, 2009. Of the service amount, the labor cost was calculated based on the daily wage per month for software technicians published by the president of the Korea Software Industry Association in accordance with the “Standards for Software Business Consideration” and the monthly wage per month, taking into account the unit price per software engineer’s daily wage per month, and the input time was determined in proportion to the number of inputs. Since then, the instant contract was renewed until December 31, 2020, the Plaintiff paid KRW 3074 and 747 of the instant contract for the construction and operation of the information system in proportion to the total amount of labor cost per month (M/M (man/month, hereinafter “the unit price”).

C. After conducting a corporate tax investigation on the Plaintiff, the director of the Seoul Regional Tax Office: (a) paid the service price calculated on the basis of the service price discounted from the notified unit price to SPC; (b) the Plaintiff paid the service price calculated on the basis of the notified unit price to SPC; and (c) subsequently reduced the Plaintiff’s tax burden on the Plaintiff’s income through a transaction with a specially related person; and (c) notified the Defendant of the data for taxation. Accordingly, pursuant to Article 52(1) of the Corporate Tax Act; (d) Articles 88(1)7 and 89(1) and (5) of the Enforcement Decree of the Corporate Tax Act, the Defendant notified the Defendant of the data on the Plaintiff’s income. Pursuant to the following table, the Defendant: future three life-longs; and (e) modern industrial development with SPC as at the time of the transaction of the service related to the building and operation of the information system in 209.

“The instant unit price” shall be included in the Plaintiff’s gross income for the business year 2009 when the Plaintiff reported the difference between KRW 27,821,061,828 and KRW 34,007,753,474, and KRW 6,186,691,646 to the Plaintiff’s actual service price calculated by applying the input number to the instant unit price (hereinafter “instant unit price”). On March 5, 2015, the Plaintiff corrected and notified the Plaintiff of KRW 1,332,94,94,820 and KRW 162,249,70 for the business year 209 (hereinafter “instant disposition”).

List of votes

(unit: Won)

Future Edive Bio-resources

Modern Industry Development

Special-grade technicians;

16,587,856

12,325,126

13,104,00

High-class technicians

12,434,186

9,690,526

9,823,000

Middle-class technicians;

10,351,390

7,855,971

8,177,000

First-class engineer;

7,737,246

6,138,153

6,112,00

D. On June 8, 2015, the Plaintiff filed an objection with the director of the Seoul Regional Tax Office, but was dismissed on July 9, 2015. On October 15, 2015, the Plaintiff filed an appeal with the Tax Tribunal, but was dismissed on February 11, 2016.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 4, 5 (including branch numbers; hereinafter the same shall apply), Eul evidence Nos. 1 through 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the unit price of this case is not the price traded in a situation similar to the contract of this case, it cannot be deemed as the market price of services under the contract of this case. Rather, the publicly notified unit price applied by the plaintiff for the calculation of service price should be deemed as the market price. In addition, there is no business practice that calculates the service price at a discount of the publicly notified unit price claimed by the defendant, and considering that the contract of this case is a transaction between affiliated companies, it cannot be deemed as an abnormal transaction lacking economic rationality.

Therefore, Article 52(1) of the Corporate Tax Act, which is the provision denying wrongful calculation, and Article 88(1)7, and Article 89(1) and (5) of the Enforcement Decree of the Corporate Tax Act, cannot be applied to the Plaintiff. Thus, the instant disposition is unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Relevant legal principles

Article 52 of the Corporate Tax Act provides that where a corporation’s wrongful calculation under Article 52 of the Corporate Tax Act is deemed to have avoided or reduced tax burden by abusing the various transaction forms listed in each subparagraph of Article 88(1) of the Enforcement Decree of the Corporate Tax Act without a reasonable method by a person having a special relationship, it shall be deemed that the person having a tax authority denies it and has the income which appears to be objective and reasonable by the method prescribed in the statutes. In light of the economic person’s position, it shall be limited to cases where it is deemed that the person having a tax authority neglected the economic rationality by calculating an unnatural and unreasonable act. Determination of whether the economic rationality exists should be made based on whether the transaction is abnormal in light of sound social norms or commercial practices, taking into account the various circumstances of the transaction.

Article 88(1)7 of the Enforcement Decree of the Corporate Tax Act provides for "a case where a corporation borrows or receives money, other assets, or services at an interest rate, rate, or rent higher than the market price as one of the grounds for denying wrongful calculation." According to Article 89(1) of the Enforcement Decree of the Corporate Tax Act, the "market price of services, which serves as the basis for determining whether a corporation is a case where services are provided by paying a higher price than the market price to a person with a special relationship." In the circumstances similar to the relevant transaction first, the relevant corporation shall be based on the price continuously traded with many and unspecified persons other than a person with a special relationship or on the price generally traded between third parties who are not a person with a special relationship. The burden of proving and proving the "market price, which serves as the basis for denying wrongful calculation, is against the tax authority claiming the denial of wrongful calculation (see, e.g., Supreme Court Decision 201

2) Issues of the instant case

The instant unit price is the unit price of services applied in the agreement between the SPC and the future set and modern industrial development, which is not a person with a special relationship. Accordingly, the Defendant must prove that the instant unit price is either a transaction based on the instant contract and a transaction between the SPC and the future set-up life, or a similar situation between modern industrial development; ② whether the instant unit price is a “price continuously traded between the SPC and many unspecified persons” or a “price generally traded between a third party”. Furthermore, the Defendant must prove that the instant unit price is a “price generally traded between the third parties” and (3) whether the instant transaction under the instant contract is erroneous in light of sound social norms or commercial practices. However, the instant disposition is deemed unlawful.

3) Determination on issues

A) The key issue is ① “similar situation” as stipulated in Article 89(1) of the Enforcement Decree of the Corporate Tax Act refers to a situation in which a contract, which forms the basis of the pertinent transaction, and a contract, which forms the basis of the comparable transaction, is similar in its contents. It should be deemed that the specific situation faced by the parties at the time of each transaction, namely, the type of business carried on by the parties, and other situations such as the purpose and process of concluding each contract and the transaction, are similar.

However, according to the evidence Nos. 16-1 and 17-1 of the evidence Nos. 16-1 and 17-1, it can be acknowledged that the facts contained in the contracts made between the SPC and Hyundai Industrial Development and other similar phrases in the contracts of this case. However, it is insufficient to deem that the transactions between the SPC and the future sets, and Hyundai Industrial Development were conducted in a situation similar to the transactions based on the contracts of this case. There is no evidence to acknowledge otherwise (the defendant submitted evidence Nos. 12 and 13, and there is no evidence to acknowledge otherwise (the defendant publicly announced that the SPC entered into a Saturday contract similar to the contracts of this case with the Hyundai Industrial Development and the future set forth in the evidence Nos. 12 and 13). However, the evidence No. 12 and 13 stated that the Hyundai Industrial Development entered into the LGNS agreement with the LGNS).

Rather, in full view of the statements and the purport of evidence Nos. 10 and 11 as a whole, the future set life-long is acquired on June 7, 2005 by the KSP Co., Ltd., which entered into a service agreement for the establishment and operation of the information system with the KSC under the business group EK on June 7, 2005, and it is recognized that the first step of operation was completed on or around April 2008 by starting its own computer system construction around September 2006. Thus, it can be viewed that the transaction situation between the KSC and the Plaintiff on the basis of the business year 2009 and the transaction situation between the KSC and the future set life-long.

There is only one thing.

B) Key issue ②

The evidence presented by the Defendant alone is insufficient to view the unit price of this case as "the price continuously traded between KSC and many unspecified persons" or "the price generally traded between third parties", and there is no other evidence to acknowledge it.

Rather, as seen earlier, in light of the following: (a) around April 2008, the future three life expectancys had completed the first phase of the construction of the self-electronic computer system; (b) there is only special circumstance that could have been lower than the publicly notified unit price for the first-class engineer in 2009; and (c) the overall purport of the entry and pleading in the evidence No. 5, 2009, the Korea Software Industry Association investigated 6,734 special-class engineer in 2009, 5,990 high-class engineer in middle-class engineer in middle-class engineer in 5,378, 8,254, and then published the average unit price for the software engineer’s wages by weighted averageing the unit price for the first phase of the construction of the self-electronic computer system; (d) there is a much room to view the said unit price as “the market price for the same trade with the third party-level engineer in which the said unit price was discounted from 2009 to 201 U.S.C.C.

It can not be readily determined that it had been conducted, and there is no other evidence to recognize it).

C) Key issue3

The Defendant asserts that the instant contract term is too ten years so that it could not reflect the “market price due to changes in the economic environment”, and that the notified unit price has been continuously higher than the labor cost applied to transactions with non-affiliated companies, and that the transactions based on the instant contract should be deemed as an abnormal transaction lacking economic rationality in light of sound social norms and commercial practices.

In light of the fact that the instant contract was concluded at the beginning of the information technology that had the concept of the construction and operation of the information technology system in Korea, and since the instant contract is a collective information technology system construction and operation contract, setting the contract term for a long period may be deemed to be helpful for the stable and efficient management of the Plaintiff’s electronic computer system, it is difficult to deem that the instant contract term is 10 years as an abnormal transaction that lacks economic rationality.

In addition, as seen earlier, insofar as the circumstance was not revealed that the transaction based on the instant contract and the KSC was conducted in a similar situation with non-affiliated companies, such as the Korea Air Space, the circumstance that the publicly notified unit price is higher than the labor cost applied to the transaction with non-affiliated companies is an abnormal transaction that lacks economic rationality, even if it is difficult to deem the circumstance to acknowledge the transaction based on the instant contract as an abnormal transaction that lacks economic rationality.

4) Sub-determination

Therefore, Article 52(1) of the Corporate Tax Act, which is the provision denying wrongful calculation, and Article 88(1)7, and Article 89(1) and (5) of the Enforcement Decree of the Corporate Tax Act, cannot be applied to the Plaintiff. Thus, the instant disposition is unlawful.

3. Conclusion

The plaintiff's claim is justified and the costs of lawsuit are assessed against the losing defendant. It is so decided as per Disposition.