2017년 법인세법 판례회고

The discussions in this paper will focus on 8 selected Supreme Court decisions rendered in 2017 relating to corporate income tax issues that serve as meaningful precedents. In 2016Du69249, decided on March 9, 2017, the Supreme Court held that non-profit domestic organizations with reserves for proper business purposes may recognize taxable income immediately in the tax year in which such reserves are used for purposes other than its proper business purposes at any time during the 5-year deferral period. In 2015Du60884, decided on September 21, 2017, the Supreme Court maintained its previous position to increase actual regulation on labor costs of executives, such as bonuses and severance pay, by determining that compensation of executives cannot be recognized as deductible expenses despite its external appearance as wage income to the extent that such compensation is, in fact, a distribution of a company's retained earnings as opposed to normal consideration for performance of duties. In 2014Du32201, decided on October 29, 2017, the Supreme Court determined that a corporation's use of a residential property as residences of corporate shareholder executives was not a loan of funds for the acquisition of the company housing and as such, the property should not be categorized as non-business real estate. In 2015Du48693, decided on January 12, 2017, the Supreme Court held that, although a portion of dividend income received by a domestic corporation from investment into another domestic corporation is generally recognized as non-taxable income, payments received by a domestic corporation based on investment into another domestic corporation that operates the business on the basis of an undisclosed association agreement is not recognized as dividend income of a shareholder and should therefore be recognized as taxable income. In 2015Du49115, decided on July 11, 2017, the Supreme Court determined that interest on borrowings that are deductible adjustments in computing the non-taxable dividend income of a corporate shareholder should not be limited to interest on borrowings pursuant to a loan agreement under the civil law or borrowings that are separately related to invested shares. In 2017Du51310, decided on October 26, 2017, the Supreme Court decided that price-fixing compensation paid out to competing companies as compensation for abandoning competitive bids may not be recognized as deductible expenses, adopting the same position as in existing precedents that rebates and other expenses incurred in violation of social order cannot be deemed as deductible expenses. In 2014Du2256, decided on December 22, 2017, the Supreme Court held that, whereas loss incurred on disposal of loans in respect to related parties are non-deductible expenses from a corporate income tax perspective, loss on disposal of loans may be recognized as deductible expenses where the special relationship is extinguished prior to the loan disposal. In 2016Du60201, decided on September 21, 2017, the Supreme Court deliberated on Article 69(3) of the Enforcement Decree of the Corporate Income Tax Act, which restricts the right to seek ex-post facto claim for rectification by requiring any unrealized income from the cancellation of a construction contract to be included in the business year in which the cancellation occurred. The Supreme Court determined that the above provision applies to ex-post facto claims for rectification with respect to corporate income taxes in 2012 but not to income taxes with respect to previous business years, even if grounds for ex-post facto rectification arise.