Deals & Cases

Tax 2019-12-27
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DR & AJU Successfully Obtains a Court Decision Accepting the Client’s Request for the Cancellation of Additional Charges Imposed

The tax authority designated plaintiff, the oligopolistic shareholder of company A, as the secondary taxpayer of company A to collect the local taxes in arrears and notified the plaintiff to pay the sum of the local taxes and additional charges borne by company A at the ratio of the plaintiff's shareholding in company A.

The Supreme Court held in other case that a principal taxpayer has no claim to seek the cancellation of the measure of additional charges where no such measure of imposition of additional charges exists because the additional charges imposed as a delayed interest on the overdue taxes are incurred by the law without taking a separate procedure to confirm the amount of additional charges by the tax authority and the amount is already confirmed. Upon the plaintiff’s appeal against the designation of the secondary taxpayer and the measure of taxation, the tax authority argued, before the proceedings on the merits, based on the Supreme Court precedent that the appellant could not make a claim with respect to the additional charges as such claim relates to the non-existing measure.

DR & AJU structured a legal principle that where the tax authority confirms and notifies the secondary taxpayer of the amount of additional charges borne by the principal taxpayer, this should be regarded as a new and distinct measure imposing the obligation on the plaintiff, the secondary taxpayer, to pay the confirmed additional charges, which should be separate from the principal taxpayer’s obligation to pay the additional charges, and thus such measure with respect to additional charges should be recognized. The Court cited the appellant’s claim.

This case is of importance in that a measure with respect to additional charges imposed on the secondary taxpayer is explicitly recognized, which entitles oligopolistic shareholder, etc. to a judgment on the merits of the measure of taxation in whole including additional charges.