The valuation profit and loss of this case shall not be included in the foreign exchange transaction profit and shall not be included in the internal profit.

The valuation profit and loss of this case shall not be included in the foreign exchange transaction profit and shall not be included in the internal profit.

2016Guhap63927 Revocation of rejection of an application for rectification of education tax

Doe Bank

O Head of tax office

December 23, 2017

on 03.03 09

1. All of the plaintiff's claims are dismissed.

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

Cheong-gu Office

The defendant's rejection disposition against the plaintiff on September 23, 2015 is revoked in all the amount of the "amount of correction claim" stated in the "amount of correction claim" stated in attached Table 1.

1. Details of the disposition;

A. The plaintiff's status

The plaintiff deals with derivatives such as currency forward contract 1) and currency swap contract 2) as the business office of a foreign bank established for banking business, etc.

(b) Report of education tax base;

From January 2010 to April 2013, the Plaintiff did not include the monetary forward and swap evaluation profit and loss (hereinafter referred to as “the evaluation profit and loss in this case”) in the tax base at the time of filing the tax base of education tax. From January 2014, the Plaintiff reported and paid the tax base of education tax by reflecting Article 4(1)5 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 26076, Feb. 3, 2015; hereinafter referred to as the “former Enforcement Decree of the Education Tax Act”).

C. Disposition of this case

From May 20, 2013 to April 10, 2015, with respect to the education tax reported and paid by the Plaintiff to the Defendant from January 20, 2010 to April 10, 2015, the Plaintiff filed a request for correction with the Defendant for the correction of the amount of education tax reported and paid by the Plaintiff. However, the Defendant rejected this request as follows (hereinafter referred to as the “instant disposition”) on September 23, 2015, by adding up the tax base of education tax under Article 4(1)5 of the Enforcement Decree of the Education Tax Act to the amount of excess reported and paid education tax.

(d) Implementation of the preceding trial procedures;

On December 21, 2015, the Plaintiff filed an appeal with the Tax Tribunal on the instant disposition, but was dismissed on February 25, 2016.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Article 4 (2) 2 (d) of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 22046, Feb. 18, 2010); however, Article 4 (1) 5 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 22046, Feb. 18, 2010) deleted a comprehensive title (hereinafter referred to as "comprehensive title") of the "foreign exchange profit (excluding foreign exchange profit)" which was previously determined as the revenue amount of financial and insurance business entities, in order to prevent a rapid increase in the burden of education tax due to foreign exchange transactions and derivatives transactions, it should be deemed that the legislators made a legislative decision to add the evaluation profit and loss to the foreign exchange transactions in order to prevent a rapid increase in the burden of education tax due to foreign exchange transactions and derivatives transactions, and therefore, the evaluation profit and loss of this case should be deemed to be included in the "an aggregate of the evaluation profit and loss in the attached Form 1 (4) of the former Enforcement Decree of the Education Tax Act."

B. Relevant statutes

Attached Form 2 shall be as listed in attached Table 2.

C. Determination

In full view of the following circumstances, it is reasonable to view that the instant valuation profit and loss may not be included in the transaction profit and loss until it explicitly stipulates that the instant valuation profit and loss is included in the transaction profit and loss, as amended by Presidential Decree No. 26076, Feb. 3, 2015, by comprehensively taking into account the following circumstances acknowledged by the relevant statutes and the overall purport of each evidence and arguments as seen earlier. Accordingly, the Plaintiff’s assertion on this part is rejected.

① Article 4(2) of the former Enforcement Decree of the Education Tax Act lists the revenue amount generated from transactions which increase the net assets, and the revenue amount generated by financial and insurance business entities falling under Article 5(3) of the Education Tax Act and each subparagraph of Article 4(1) of the Enforcement Decree of the same Act shall be, in principle, included in the education tax base unless the revenue amount falls under the revenue amount prescribed not to be included in the education tax base under Article 4(2) of the former Enforcement Decree of the Education Tax Act (see, e.g., Supreme Court Decision 2014Du13140, Feb. 12, 2015). However, so long as the pertinent valuation profit falls under the profit of assets and liabilities deemed as gains under Article 42 of the Corporate Tax Act, it shall not fall under the internal profit prescribed in Article 4(2)2 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 22046, Feb. 18, 2010).

(2) Article 5 (3) of the Education Tax Act provides that "amount of revenue of a financial or insurance business entity" shall mean interest, dividend, commission, guarantee fee, securities sales profit and redemption profit, insurance premium and other amounts prescribed by Presidential Decree. Article 4 (1) of the former Enforcement Decree of the Education Tax Act delegated pursuant to Article 5 (3) of the Education Tax Act lists the amount of revenue of a financial or insurance business entity included in the education tax base, and among them, subparagraph 8 of Article 4 of the former Enforcement Decree of the Education Tax Act provides a legal basis to include the amount of revenue not falling under the amount of revenue individually and specifically enumerated in subparagraphs 1 through 7 in the education tax base. If the evaluation profit and loss of this case do not fall under subparagraphs 1 through 7 above, it shall be interpreted that only the amount of evaluation profit and loss falls under subparagraph 8.

③ Under the principle of no taxation without the law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring any special circumstance, and it shall not be extensively or analogically interpreted without any reasonable reason (see Supreme Court Decision 2002Du9537, Jan. 24, 2003). Article 4(1)5, 5-2, and 5-3 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 22046, Feb. 18, 2010) and Article 4(2)2 (a) of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 2302, Jul. 14, 201); so long as the concept of "trade profit," "evaluation profit," and "profit, loss, etc. prior to the final profit, etc., of the transaction constitutes the interim stage of the transaction before the enforcement Decree No. 2514, Feb. 14, 2012).

(4) In addition, derivatives financial product trading profits and derivatives financial product evaluation profits are divided into other accounts in corporate accounting standards, and the plaintiff also seems to have included the derivatives financial product trading profits from the standard income statement as other business profits and the derivatives financial product evaluation profits separately.

⑤ Under Article 42(1)3 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010); Article 73 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 20619, Feb. 22, 2008; hereinafter referred to as the “former Enforcement Decree of the Corporate Tax Act”), foreign currency assets and liabilities were included in the calculation of earnings or liabilities as of the last day of the business year or the date of conclusion of the contract; Article 76(1), (2) and (4) of the former Enforcement Decree of the Corporate Tax Act provides that: (a) foreign currency assets and liabilities are subject to the evaluation of foreign currency assets and liabilities held by financial institutions as well as currency forward and currency swap among the currency-related derivatives held by financial institutions; and (b) it is difficult to view the aforementioned evaluation of profits or liabilities as the calculation of profits or losses arising from the calculation of earnings or liabilities under Article 20(1)4 of the former Enforcement Decree of the Corporate Tax Act as the education Tax Act.

(6) Article 4 (1) of the Enforcement Decree of the Education Tax Act has been amended several times on February 28, 2007, February 4, 2009, February 18, 2010, and July 14, 201, and it is true that the amendment has been made in the direction of adding up various derivatives for the purpose of reducing the burden of education tax on financial and insurance business operators as alleged by the Plaintiff, but it is very different in the form of the amendment. In light of the fact that Article 4 (1) 5 of the former Enforcement Decree of the Education Tax Act, amended on February 18, 2010, deleted from the instant overall title, intended to add the profits and losses of the assessment of this case, it is difficult to accept that the Plaintiff’s assertion that the purport of the elimination of the instant overall title, as amended on February 18, 2010, is based on the legislative intent

7) The Plaintiff asserts that since the amendment of the Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 23022 of July 14, 2011), the tax practice was formed to include foreign exchange profit and loss in exchange transactions after the elimination of the instant subparagraph, and that the scope of "foreign exchange profit and loss" under Article 4 (1) 5 of the Enforcement Decree of the Education Tax Act should be construed as including foreign exchange profit and loss in exchange transactions including currency guidance and swap, and that the instant valuation profit and loss should also be included in the calculation of "foreign exchange profit and loss" under Article 4 (1) 5 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 2302 of July 14, 2011) and "foreign exchange profit and loss" under Article 4 (1) 6-2 of the former Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 23022 of the same Act) should not be included in "foreign exchange profit and loss in exchange transactions" including "foreign profit and loss" under Article 5 of the same Act.

(8) The education tax stipulates that the revenue per se shall be the tax base, unlike the ordinary revenue tax, due to the peculiarity of the purpose tax aimed at securing the financial resources required for expanding the education finance in order to improve the quality of education (in addition, the taxation principle of foreign taxation). Before Article 8(1) of the Education Tax Act amended by Act No. 13620, Dec. 29, 2015, the taxable period was set differently from the business year of the Corporate Tax Act. The unreasonable issue of taxation, such as double taxation, etc., pointing out by the Plaintiff is merely due to the inherent limit in the education tax law system that does not recognize the carried-over deduction, while only the tax base is the revenue amount under the taxation method of every three months. Furthermore, if the education tax base of each quarter overlaps partially, it is difficult to deem that each quarter of the education tax base overlap.

① Article 4(1)5 of the Enforcement Decree of the Education Tax Act (amended by Presidential Decree No. 26076, Feb. 3, 2015; Presidential Decree No. 2607; Presidential Decree No. 2605, Feb. 18, 2015; Presidential Decree No. 2015; Presidential Decree No. 2065, Feb. 26, 2015; Presidential Decree No. 2015; Presidential Decree No. 20166, Feb. 26, 2015; Presidential Decree No. 2010; Presidential Decree No. 20675, Feb. 26, 2015; Presidential Decree No. 2010; Presidential Decree No. 20357, Feb. 26, 2017; Presidential Decree No. 2020, Jan. 26, 201>

3. Conclusion

Therefore, all of the plaintiff's claims are dismissed as it is without merit, and it is decided as per Disposition.

Justices Yoon Gyeong-sung et al.

Judges Kim Jong-tae

Judge Kang Dong-hun