Seo Jung-jin, Chairman of Celltrion, Loses Second Trial in 13 Billion KRW Gift Tax Lawsuit

Seo Jung-jin, Chairman of Celltrion / Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Seongpil Cho] Seo Jung-jin, chairman of Celltrion, lost again in the appellate court in an administrative lawsuit against the tax authorities, demanding a refund of 13.2 billion KRW in gift tax he had already paid. On the 23rd, the Seoul High Court Administrative Division 11 (Chief Judge Han-chang Jo) ruled this way in the appeal trial of the lawsuit filed by Chairman Seo against the Nam Incheon Tax Office, seeking cancellation of the refusal to amend the gift tax assessment.

Chairman Seo paid approximately 11.67 billion KRW in gift tax for 2012 and approximately 1.54 billion KRW for 2013 on profits generated from transactions between Celltrion and Celltrion Healthcare. According to the Inheritance and Gift Tax Act, if transactions between related parties and beneficiary corporations exceed a certain ratio, the beneficiary corporation's controlling shareholders are deemed to have received a gift of part of the after-tax operating profit, and gift tax is imposed accordingly.

The proportion of Celltrion's sales to Celltrion Healthcare accounted for 94.57% in 2012 and 98.65% in 2013. Based on these regulations, Chairman Seo, who paid the gift tax, claimed a refund of a total of 13.2 billion KRW in October 2014 from the Nam Incheon Tax Office, arguing that he was not a controlling shareholder and thus had no obligation to pay. When the claim was rejected, he filed an administrative lawsuit.

Previously, the first trial ruled against Chairman Seo, stating that he was a controlling shareholder of Celltrion and thus liable for the gift tax payment.