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| TITLE | Supreme Court Decision 2015Du55295 Decided March 16, 2017【Revocation of Disposition Imposing Global Income Tax】 [full Text] |
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| Summary | |
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[1] Whether the distributable retained earnings of a specific foreign corporation under Article 17(1) of the former Adjustment of International Taxes Act shall be calculated based on the earned surplus before appropriations computed under the generally accepted accounting principles in the resident state of the relevant foreign corporation (affirmative in principle) In the exceptional case where the earned surplus before appropriations may be computed by applying Korean corporate accounting standards, the allocation of the burden of proving that the generally accepted accounting principles in the resident state of the specific foreign corporation are significantly different from Korean corporate accounting standards (held: the claimant) [2] In a case where the tax authority imposed global income tax on B, a single-person shareholder who made a 100% equity investment in Foreign Company A located in the Virgin Islands, a tax haven, deeming the amount calculated based on the earned surplus before appropriations, etc. as indicated in the financial statements prepared by Company A to be the distributable retained earnings under Article 17(1) of the former Adjustment of International Taxes Act, the case holding that: (a) distributable retained earnings shall be computed based on the financial statements apparently prepared under the generally accepted accounting principles in the resident state of Company A; (b) nevertheless, the lower court determined the tax disposition to be illegal on the erroneous premise that distributable retained earnings shall be computed by applying Korean corporate accounting standards; and (c) in so doing, it erred by misapprehending the pertinent legal doctrine |
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