SH Corporation Loses First Trial in 26.6 Billion KRW Corporate Tax Cancellation Lawsuit

Seoul Administrative Court. [Photo by Yonhap News]

[Asia Economy Reporter Kim Daehyun] Seoul Housing and Communities Corporation (SH) lost in the first trial after a legal battle demanding the cancellation of hundreds of billions of won in corporate tax imposed by the tax authorities.

On the 7th, the Administrative Division 5 of the Seoul Administrative Court (Presiding Judge Jeong Sanggyu) recently ruled against the plaintiff in the corporate tax imposition cancellation lawsuit filed by Seoul Housing and Communities Corporation against the head of Samsung Tax Office and others.

Previously, the tax authorities notified SH of a corporate tax of about 47.9 billion won based on the results of a regular integrated corporate tax audit conducted from January to May 2013.

The tax authorities included the project expenses received by SH for carrying out the district energy supply project entrusted by the Seoul Metropolitan Government in the tax base and judged that some interest income bonds for the 2011 fiscal year were omitted from accounting. The tax authorities also pointed out that a significant amount of repair costs for rental apartments was not recognized as a loss, and that SH omitted the solar power generation facilities installed with national subsidies from asset accounting in the books.

In response, SH appealed to the Tax Tribunal and obtained a decision to cancel about 21.2 billion won of corporate tax imposition. Subsequently, SH filed an administrative lawsuit requesting the cancellation of the imposition for about 26.6 billion won, which was maintained.

The first trial court rejected all of SH’s claims, stating, "The plaintiff’s claims are all groundless and are dismissed in full." Dividing the issues related to the basis of taxation into five parts, the court stated, "It cannot be seen that this imposition is illegal," and "The claim that it is illegal due to violation of the principles of good faith or estoppel is also groundless." SH appealed against this ruling.

Meanwhile, SH also filed a lawsuit to cancel the value-added tax imposition of about 225.8 billion won imposed together with corporate tax by the tax authorities, but lost in the appellate court and has appealed to the Supreme Court.

This content was produced with the assistance of AI translation services.