Whether the interpretation of Article 14(4) of the former Foreign Capital Inducement Act (amended by Act No. 4316 of Jan. 14, 191) that provides that only the property acquired after the registration of a foreign-invested enterprise shall be exempted from the acquisition and property taxes for a certain period of time (negative)

As acquisition tax is an act tax that serves as a requirement for taxation on the acquisition of a taxable object, the tax liability arises at the time of acquisition, while property tax is a profit-free tax that recognizes and imposes the ability to pay taxes on the property in possession, and its tax liability arises independently every year during the possession of the property concerned. Thus, Article 14(4) of the former Foreign Capital Inducement Act (amended by Act No. 4316, Jan. 14, 191) provides that acquisition tax and property tax on the property acquired and held by a foreign-invested enterprise in order to operate a business authorized by the foreign-invested enterprise shall be exempted for five years from the date of registration in accordance with the foreign investment ratio of the enterprise concerned only for the property acquired and held after registration, and it shall be interpreted that property tax is exempted only for the property acquired after registration, and it shall not be interpreted that property tax is limited to the property acquired after registration.

Article 14 (4) of the former Foreign Capital Inducement Act (amended by Act No. 4316 of January 14, 1991)

Law Firm Barun, Attorney Jeon Jong-gu, Counsel for the defendant-appellant

Attorney Park Il-il, Counsel for the head of Songpa-gu Seoul Metropolitan Government

Seoul High Court Decision 91Gu1211 delivered on December 5, 1991

The judgment below is reversed and the case is remanded to Seoul High Court.

The Plaintiff’s ground of appeal No. 1 is examined (the supplementary appellate brief was submitted after the expiration of the period for submitting the supplementary appellate brief, and it is judged to the extent of supplement in case of supplemental appellate brief)

1. According to the reasoning of the judgment below, since Article 14(4) of the former Foreign Capital Inducement Act, which was amended by Act No. 3691 on December 31, 1983, effective from July 1, 1984, enters into force, shall be exempted from acquisition tax and property tax on the property acquired and held by a foreign-invested enterprise in order to carry on a business authorized by the foreign-invested enterprise for five years from the date of registration under the foreign investment ratio of the enterprise: Provided, That the acquisition tax and property tax on the property shall be exempted for five years from the date of acquisition of the property in question, including the property acquired for the original purpose of the business before the foreign-invested enterprise's registration. The purport of the above provision is that tax reduction and exemption for the foreign-invested enterprise is, in principle, benefit from the acquisition of the foreign-invested enterprise's capital in accordance with the foreign-invested ratio introduced by the foreign-invested enterprise to 80 years prior to the date of acquisition of the property in question, and thus, it shall be exempted from the property tax reduction and exemption for five years prior to the original purpose of acquisition tax.

2. However, as acquisition tax is an act tax that serves as a taxation requirement for the acquisition of a taxable object, the liability to pay taxes arises at the time of acquisition, while property tax is a profit-free tax having the nature of a taxable capacity recognized and taxed by a foreign-invested enterprise, and its liability to pay taxes arises independently every year during the possession of the pertinent property. Thus, Article 14(4) of the former Foreign Capital Inducement Act provides that acquisition tax and property tax on the property acquired and held in order to operate a business approved by a foreign-invested enterprise after registration shall be exempted for five years from the date of registration in accordance with the foreign investment ratio of the relevant enterprise. It shall be interpreted that acquisition tax and property tax shall be exempted only for the property acquired after registration and shall be exempted only for the property acquired after registration, and otherwise, it shall not be interpreted that property

Ultimately, the above judgment below erred in the misapprehension of the foreign capital exemption provision under the former Foreign Capital Inducement Act, which affected the conclusion of the judgment, and there is a reason to discuss this point.

3. Therefore, without examining the remaining grounds of appeal, we reverse and remand the judgment below. It is so decided as per Disposition by the assent of all participating Justices on the bench.