“Imposition of additional tax in tax law interpretation dispute is unfair”… Actor Yoon Tae-young wins partial victory
Actor Yoon Tae-young has won a partial victory in his lawsuit against the tax authorities to cancel a gift tax assessment. The court said it was unfair to impose additional taxes on a person who had under-reported taxes due to a dispute with the tax authorities over the interpretation of the tax law.
On the 5th, the Administrative Division 2 of the Seoul Administrative Court (Chief Judge Shin Myung-hee) ruled in favour of actor Yoon Tae-young in a lawsuit against the head of the Gangnam Tax Office in Seoul to cancel a gift tax assessment, according to legal sources. “The surcharge imposed on Mr Yoon by the Gangnam Tax Office was illegal,” the court said.
In September 2019, Yoon received 400,000 shares of an unlisted company from her father, who was in the property rental business. She calculated the value of the gifted property at KRW3.166 billion and filed and paid gift tax.
The tax authorities interpreted the gift tax law differently, stating that the supplementary valuation should be compared to the “original acquisition value” rather than the “book value in the financial statement,” whichever is greater. They determined the gift value of the shares to be KRW 3,347.6 million. This was KRW 180.8 million higher than Mr Yoon’s calculation.
As a result, the Gangnam tax office imposed a gift tax of KRW 95.84 million on Mr Yoon. This amount included a surcharge of 5.44 million won. The surcharge is a type of administrative penalty for failing to fulfil tax obligations.
Yoon sued, but the court found no problem with the tax authorities’ judgement. However, it was unreasonable to impose the additional tax.
“Surcharge tax is an administrative sanction imposed when a taxpayer violates various obligations such as filing and paying taxes prescribed by law, and it is not imposed when there is a justifiable reason,” the court said. This is in line with existing Supreme Court precedent토토사이트.
The court went on to explain that surcharges cannot be imposed when there are reasonable reasons why the taxpayer cannot be attributed responsibility for not knowing the obligation due to conflicting views on the interpretation of the tax law, when there are circumstances that make it difficult to expect the party to fulfil the obligation, and when there are legitimate reasons why the party cannot be blamed for neglecting the obligation.
Meanwhile, Mr Yoon’s company stated that “all relevant taxes have been paid” and that “there has been no illegal behaviour or unfair advantage.”