A Study on the Deemed Acquisition Tax on Oligopoly Stockholders under the Local Tax Act
Asian Tax Journal Vol. 17 No. 3 (2016), pp. 231-258
Abstract
The deemed acquisition tax may violate basic human rights and property rights of the oligopolistic stockholders. Although a person becomes an oligopolistic stockholder, the company’s economic interest does not effectively belong to him/her. The arguments for the abolishment are based on the Constitutional Court’s standard of constitutional review, the legislative intents and theoretical basis. The details are as follows. First, if the standard of constitutional review based on the principle of proportionality is applied, the arguments for the deemed acquisition tax is weak. Second, the oligopolistic stockholders of unlisted companies are deemed to have abused the corporate legal entity, hence they are punished by lifting the cor porate veil. This is an accessive application of piercing the corporate veil. Third, it is clear that current deemed acquisition tax imposed on the oligopolistic stockholders violates the shareholders’ limited liability principle under the commercial laws as it imposes acquisition tax liability in addition to their investment liability. Fourth, the assets acquired by an independent legal corporate entity be long to the corporate and should not be deemed to have been acquired by its shareholders. Fifth, The deemed acquisition tax imposed on the oligopolistic stockholders is also considered as an economic double taxation since it imposes the same taxes, the acquisition taxes, to both of companies and the oligopolistic stockholders. Sixth, considering the negative aspects of the system such as the violations of people’s property and basic human rights, confusions in legal structure and legal relationship, and continuous civil complaints, there are bigger damages caused by the system rather th an public interests. Seventh, the tax system can’t be justified by the increase in tax collection. Therefore, Because of the reasons stated above and various other reasons, current deemed acquisition tax imposed on the oligopolistic stockholders must be abolished.
Keywords
- oligopolistic stockholders
- deemed acquisition tax
- piercing the corporate veil
- substanceover－ form doctrine
- shareholders’ limited liability principle
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