임원 또는 직원의 회사 자산 횡령에 대하여 공급 또는 공급으로 의제가 되는 행위로 부가가치세 과세를 할 가능성

This article deals with an issue whether value-added tax(VAT) can be levied when an executive or employee of a company embezzles the company’s assets. The company deducts input tax when purchasing the assets. At this stage, the assets are already in the realm of VAT. The embezzlement is a subsequent event. Therefore, the issue is whether embezzlement can be called supply. This is linked to the question of whether illegal transactions can be taxed. If they are not supply, they should also be considered whether it can be taxed as deemed supply. Even illegal transactions can be subject to VAT. However, not all illegal transactions can be taxed. It is necessary to consider the reasons for the violation, the nature of the transaction, and the object of the transaction. Embezzlement is a criminal act. But it is not an easy matter to say embezzlement is an illegal transaction but it’s taxable. And also it is not an easy matter to say you can’t tax it because it’s an illegal transaction. It is necessary to judge whether embezzlement meets the requirements for supply that is subject to VAT. Embezzlement is not supply. If an executive or employee embezzles the company’s assets, the company is only a victim of embezzlement. The company did not deliver or transfer assets voluntarily. In addition, the company did not act proactively. In other words, embezzlement cannot be called an act that is according to the company’s will. The company cannot collect the VAT in transaction. The company cannot issue a tax invoice either. At this time, the company has no sales tax but deducts input tax. In other words, the government has to pay the amount of input tax deducted. This is an unintended result of the VAT system and is contrary to the basic structure of VAT. But the chances of being a victim of embezzlement are very low to reduce VAT equivalent to input tax. Just because an executive or employee embezzles the company’s assets, embezzlement cannot be deemed as supply and taxed. The company may deduct the input tax related to the embezzled object. However, deducting input tax does not always mean that it can be deemed as supply. It is a matter of choice how far to deem and tax when the requirements for supply are not met. Where the company uses or consumes assets for own personal purposes or other purposes not directly related to business, or where the company allows his or her employees or other persons to use or consume such assets without any compensation or at less than the market price thereof, it can be deemed supply of goods. However, when an executive or employee embezzles the company’s assets, the assets within the domain of company are transferred to domain of the executive or employee. As a result, the purpose or use of the asset is changed, which is not related to the business. This can be called the use or consumption of the executive or employee. However, the purpose or use has not changed according to the company’s intention. Embezzlement is beyond the control of the company. It also does not meet the requirement that a company should not receive a fair price even though it can receive it.