National Tax Service Review Corporation 201-001 (201.04.04)

Bad debt shall be included in deductible expenses in the business year including the date extinctive prescription is completed.

The bad debt shall be included in deductible expenses in the business year to which the date when the extinctive prescription expires, and even if the exclusion period expires, the bad debt in this case can be subject to the prescribed request for correction, so it can solve the problem of double taxation through the request for correction of corporate tax, and there is no obligation to recognize the details of the plaintiff's corporate tax on the ground that the tax authority can not decide

2011Guhap20727 Revocation of Disposition of Corporate Tax Imposition

XX Stock Company

Head of Eastern Tax Office

September 20, 2011

November 18, 2011

1. The plaintiff's claim is dismissed.

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

The disposition of imposition of KRW 164,953,530, which the Defendant rendered to the Plaintiff on October 15, 2010, shall be revoked.

1. Details of the disposition;

A. The Plaintiff filed a return of corporate tax in 2006 by offsetting the total bad debt amount of KRW 499,979,978 (hereinafter “instant bad debt”) with the bad debt amount of the sales claim, the extinctive prescription of which was completed from 1998 to 2004, against the bad debt amount of KRW 49,979,978 (hereinafter “instant bad debt”).

B. The director of the Seoul Regional Tax Office confirmed that the Plaintiff reported and paid corporate tax by adding all the deductible expenses in the business year 2006 without paying the deductible expenses for each business year to which the date when the extinctive prescription of the instant bad debt has expired, and notified the Defendant

C. On October 15, 2010, the Defendant decided and notified 164,953,530 won of corporate tax in 2006 (hereinafter “instant disposition”) on the ground that the instant bad debt amount claimed by the Plaintiff on October 15, 201 pursuant to the foregoing taxation data is not subject to inclusion in deductible expenses in 2006.

D. The Plaintiff dissatisfied with the instant disposition and filed a request for review with the National Tax Service on January 7, 201, but the said request was dismissed on April 4, 2011.

[Ground of recognition] Facts without dispute, Gap evidence 1, 4, Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In order to recover the bad debt amount in this case, the Plaintiff did not account as deductible expenses and paid corporate tax continuously. The non-deductible of bad debt amount in the business year 2006 and the extinctive prescription is not completed in deductible expenses in each business year is double taxation on the unification income. If the Defendant did not make a decision of correction on the ground that the exclusion period for the business year to which the bad debt amount in this case belongs has expired, the Plaintiff’s original contents of the report should be recognized. Accordingly, the instant disposition based on the different premise is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

According to Article 34(2) of the Corporate Tax Act (amended by Act No. 9267 of Dec. 26, 2008), and Article 62(1)1 and (3)1 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 19891 of Feb. 28, 2007), Article 62(1)1 and (3)1 of the same Act provide that credit sales whose extinctive prescription has expired shall be included in deductible expenses for the business year in which the date on which the extinctive prescription has expired falls. Therefore, the bad debt in this case shall be included in deductible expenses from 1998 to 2004, which is the business year in which the date on which the extinctive prescription has expired, and all of them shall not

In addition, even if the exclusion period has expired, the bad debt of this case can be subject to a request for correction under Article 45-2 (2) 4 of the Framework Act on National Taxes (amended by Act No. 8830 of Dec. 31, 2007) (see, e.g., Supreme Court Decision 2005Du7006, Jan. 26, 2006). Thus, the plaintiff can solve the problem of double taxation through a request for correction of corporate tax from 1998 to 2004, and there is no obligation to recognize the plaintiff's content of corporate tax in 2006 on the ground that the defendant cannot make a decision of correction on his own.

Therefore, the instant disposition on the same premise is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.