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| TITLE | Supreme Court Decision 2014Du335 Decided November 26, 2015【Revocation of Imposition of Corporate Tax, etc.】 [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 former Framework Act on National Taxes / Whether the principle of substantial taxation is applicable to an international transaction in which a resident or domestic corporation establishes, and uses only the corporate form of, a merely formal “base company” in a tax haven to avoid domestic taxes (affirmative) [2] In cases where it is difficult to apply the transfer price tax system under the former Adjustment of International Taxes Act to an international transaction between persons in special relationship, and the substance of the transaction constitutes a transfer of domestic corporate profits to a foreign related person without consideration, whether said transaction falls under any of the items under Article 3-2 of the former Enforcement Decree of the Adjustment of International Taxes Act (affirmative) / In cases where a domestic corporation jointly holding derivative-based rights with a foreign related party distributes profits to the said foreign related party by allowing it to exercise the entire right, whether such an act falls under the scope of the repudiation of wrongful calculation under Article 52(1) of the former Corporate Tax Act and Article 88(1)7-2 of the former Enforcement Decree of the Corporate Tax Act (affirmative) [3] In cases of a corporate transfer of issued stocks together with its managerial control, whether the transaction price may be deemed an ordinary market price (negative) / In cases of stock transactions involving a complete transfer of managerial control, whether the transaction price may be deemed an arm’s length price (negative in principle) |
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