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| TITLE | Supreme Court Decision 2017Du48543 Decided April 24, 2018【Revocation of Disposition Imposing Corporate Tax Act】 [full Text] |
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| Summary | |
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[1] Meaning of “a withholding agent liable for tax due on interest income payable to a domestic corporation” under Article 73(1) of the former Corporate Tax Act [2] In a case where: (a) Bank A, etc. concluded a checking account agreement with commercial paper (CP) issuers and distributed promissory notes to the CP issuers; (b) the notes that were issued at a discount were then deposited with the Korea Securities Depository (KSD); (c) subsequently, rather than following the ordinary promissory note settlement process, the CP holders withdrew the deposited notes prior to their maturity, went directly to their main commercial bank without going through the KSD, presented the notes to request payment, and was paid the respective amount; (d) however, the CP holders were exempt from paying withholding tax on the interest income accrued from the discount of notes by the KSD, etc.; and (e) accordingly, the competent tax authorities, on the grounds that Bank A, etc. (paying bank) was liable to withhold tax on the amount of discounted notes, rendered a disposition imposing additional tax for dishonest payment, etc., the Court affirming the lower judgment finding that Bank A, etc. did not constitute a withholding agent as prescribed by Article 73(1) and (5) of the former Corporate Tax Act |
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