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| TITLE | Supreme Court Decision 2015Du2611 Decided December 15, 2016【Revocation of Disposition Imposing Corporate Tax】 [full Text] |
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| Summary | |
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[1] Person liable for tax on the income derived from a property in cases where: (a) the person to whom the income from the property nominally accrues lacks the capacity to de facto control or otherwise manage the property; (b) there is another person who substantially controls or otherwise manages the property by means of governance, etc. over the nominal owner; and (c) the disparity between name and substance arises from the intent to avoid a tax (held: the person who substantially controls or otherwise manages the property); and whether the said same principle applies likewise to the interpretation and application of a tax treaty (affirmative in principle) [2] Person liable to pay corporate tax on domestic source income in cases where: (a) a foreign unincorporated association or foundation, or other foreign organization, is a forprofit organization distributing to its constituent individual members the income derived from domestic sources as provided under Article 119 of the former Income Tax Act or Article 93 of the former Corporate Tax Act; and (b) the said foreign organization may be deemed a foreign corporation under the former Corporate Tax Act (held: the organization), and standard for determining whether the organization may be deemed a foreign corporation [3] In cases where the Republic of Korea and the United States of America initiated a mutual agreement procedure on Korea’s exercise of its tax authority on capital gains from stock transfer by a corporation in excessive possession of real property situated in Korea, and reached agreement on Korean sources of income, whether the agreement is a valid mutual agreement as provided under Article 27(2)(c) 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 (affirmative); and whether Korea may tax the said capital gains accordingly (affirmative) [4] Whether Article 93 subparag. 7 of the former Corporate Tax Act, which provides for domestic source income accrued to foreign corporations, is contrary to the constitutional principle of no taxation without representation or the principle against blanket delegation (negative) |
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