2016년 법인세 및 소득세 판례회고

Among Supreme Court decisions rendered in 2016 relating to corporate tax or personal income tax, six were selected that are juridically meaningful or precedential. Factual background and substance of the decisions are introduced, followed by study of the legal principles and significance of each decision. Four decisions were selected regarding Corporate Tax Law. Supreme Court Decision 2015Du2451 rendered on July 14, 2016 on the beneficial owner of dividend income that a middle holding company received, reconfirmed the existing legal principles and further proposed the decision criteria for determining the beneficial owner and factual basis for such criteria. Through Supreme Court Decision 2013Du51415 rendered on July 14, 2016, it is possible to have a grasp of the decision criteria for the scope of “essential business activities”, one of the requirements for acknowledging a permanent establishment. Supreme Court Decision 2013Du17534 rendered on January 14, 2016 placed importance on the wording of law and decided that if a debt guarantee does not belong to the types of debt guarantee enumerated in law, bad debt expenses from claim for reimbursement for such guarantee cannot be deducted as expenses. On the other hand, Supreme Court Decision 2015 Du50153 rendered on February 18, 2016 made a narrow interpretation of rules regarding retirement allowance for executive officials despite the wording of law, and ruled that even if retirement allowance was paid in accordance with the company’s articles of association, it may not be deducted as expenses if such allowance was merely a temporary means of dispensing the company’s funds to a certain executive official. Two decisions were selected regarding income tax. Supreme Court Decision 2015Du1212 rendered on October 27, 2016 is meaningful in that it reconfirmed the current Supreme Court’s position regarding the typical all-inclusive system on financial income, and further proposed a general decision criteria for “Characteristic of distribution of profit”, which is an indefinite concept.