National Tax Service “Transactions between related parties”… Court “Accidental Consequences by the System”
The LG Group’s family won again in the first trial in an administrative lawsuit against the tax authorities’ disposition.
According to the legal community on the 22nd, the 4th administrative division of the Seoul Administrative Court (Chief Judge Choi Tae-jin) recently ruled in favor of the plaintiff in a lawsuit to cancel the transfer tax imposition filed by five people, including LG Welfare Foundation CEO Koo Yeon-kyung and former LG Card CEO Lee Jae-yeon.
After a tax investigation between 2017 and 2018, the Seoul Regional Tax Office determined that there was a situation where one of the family members placed a sell order under the leadership of the LG Group’s financial management team, and the other person traded stocks in such a way that the other person directly bought it.
According to the Income Tax Act, the 1.67 million shares held in this way fall under the income tax law, and the National Tax Service considers it to be a case of ‘transactions between related parties at a lower price than the market price and without economic rationality’. did.
The authorities evaluated the actual stock price as the amount of a 20% premium to the average closing price for two months before and after the trading date, and determined that the difference between the amount of stocks the LG family traded with each other was underreported.
CEO Koo and others filed an administrative lawsuit in September 2020, dissatisfied with the taxation, saying, “The stock was transferred through competitive trading on the Korea Exchange, and cannot be regarded as a transaction between related parties.”
The court said, “In principle, competitive trading in the exchange market is difficult to see as a transaction between specific individuals, and there is no evidence to admit that the transaction in this case has lost the essence of competitive trading or is difficult to see as competitive trading.” It is illegal and should be revoked.”
“The transaction in this case was conducted within the normal market price range, and this did not distort the transaction price or significantly affect the stock price.”
The court said, “In one order, transactions with related parties and transactions with third parties are mixed, which was not intended by the plaintiffs, but an accidental result by the exchange system.” It’s overly crafty,” he said.
The court made the same decision in the recent lawsuit against the transfer tax imposition disposition filed by Koo Bon-neung, chairman of Heesung Group, and others.
The prosecution, which investigated the case under the accusation of the National Tax Service, indicted 14 members of the LG family, including CEO Koo, and executives on charges of violating the Tax Criminal Punishment Act.
However, following the first and second trial, the Supreme Court in July last year also made a final verdict of not guilty.
/yunhap news