2010년 법인세법 판례 회고

In 2010, there were 12 published decisions dealing with corporate income tax issues. Most of the Supreme Court decisions issued this year seem to maintain or extend from the past precedents. The Korean Supreme Court Case No. 2007 Du 11382 (April 29, 2010), which is one of the 12 published cases adjudicated in 2010, is noteworthy as it clarified the mutual dependence between tax withholding obligation of the beneficial owner of the income and the corporation’s tax withholding in connection with disposition of such income, and it limited in principle the statute of limitations to 5 years for the withholding tax obligation. Also, in the Korean Supreme Court Case No. 2010Du1484 (5/27/2010) involving employee stock options, the Court clearly demonstrated that the tax authority’s long‐standing tax practice related to stock options―i.e., automatic application of the domestic anti‐avoidance rules in all cases where the income arising from the exercise of stock options exceed the tax exemption amount―was erroneous, and that instead, a factual inquiry was necessary to determine whether all statutory conditions were met to trigger the application of the domestic anti‐avoidance rules. Finally, in the Korean Supreme Court Case No. 2007Du18000 (6/24/2010), the Court held that it was unlawful to treat an item of expense as entertainment expense based on whether it exceeds a specific amount and, instead, such determination should be made based on comprehensive review of the purpose and nature of the expense, imposing more strict burden of proof on the tax authority vis‐à‐vis entertainment expense. The foregoing decisions as well as the Korean Supreme Court decisions issued this year are expected to have far‐reaching impli- cations in the tax practice.