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| TITLE | Supreme Court Decision 2018Du128 Decided December 13, 2018 【Revocation of Disposition Imposing Global Income Tax】 [full Text] |
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| Summary | |
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[1] Meaning of the principle of substantial taxation under Article 14(1) of the Framework Act on National Taxes Whether the substantial taxation principle is applicable to international trade involving individuals or domestic corporations residing in Korea that establish a base company in tax havens and only use the corporate form to evade taxation in Korea (affirmative) [2] In a case where an investor of a company makes himself/herself as a person to whom the outflow of corporate income conclusively accrues, whether such money may be confirmed as constituting dividend income for investors (affirmative in principle) [3] Effect of tax disposition made after the exclusion period for imposition of national taxes expires (invalid) [4] Meaning of “deception or other unlawful act” under Article 26-2(1)1 of the former Framework Act on National Taxes, and in a case where a taxpayer obtains income through the use of fake names, whether the mere fact of using fake names constitutes “deception or other unlawful act” (negative in principle) [5] In the case where the head of the competent tax office imposed a global income tax on Party A on the grounds that Party A evaded income tax by means of either (a) making remittance of the capital owned by a corporation Party A established in Hong Kong to corporations it established in the British Virgin Islands; or (b) lending his name to another person who received dividend income in lieu of Party A, the case upholding the lower judgment, which determined that: (a) the dividend income paid out in 1999 and 2000 by corporations based in Hong Kong to Party A using another person’s name constitutes foreign source income, and thus, cannot be subject to taxation; (b) because, Party A was deemed a U.S. resident in 1999 and 2000 according to Article 3(2) of the Convention between the Republic of Korea and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and the Encouragement of International Trade and Investment (hereinafter “Korea-U.S. Tax Treaty”) [6] In a case where (a) principal tax and penalty tax are imposed together; and (b) various types of penalty taxes are imposed together in a single notice of tax payment, the manner in which a notice of tax payment shall be written In a case where a tax notice only shows the sum amount of principal tax and penalty tax, without separately showing the amounts of principal tax and penalty tax due and how they were calculated, and the tax amount by type of penalty tax and how they were calculated, whether the relevant taxation disposition is unlawful (affirmative) |
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