Startup CEO acquitted of charges of issuing false tax invoices worth 400 million won... Why?

The CEO of a startup who was investigated by the prosecution on charges of issuing false tax invoices worth 400 million won was cleared of the charges.

On the 8th of last month, the Daejeon District Prosecutors' Office decided not to indict Mr. A, in his 40s, on charges of violating the Tax Offender Punishment Act.

Mr. A is accused of receiving false tax invoices stating that he had received materials and services from two companies, including a manufacturer, from October to December 2023.

The total value of tax invoices issued by Mr. A from these companies amounted to 450 million won.

According to Article 10 of the Tax Offenders Punishment Act, if a false tax invoice is issued without a physical transaction, you may be subject to imprisonment for up to one year or a fine equivalent to not more than twice the tax amount calculated by applying the value-added tax rate to the value of supply.

During the investigation by the investigative agency, Mr. A denied the charges, saying, "When receiving materials from the manufacturer, only the ownership was transferred and the actual goods were placed in the company's warehouse, leading to the misunderstanding that a false tax invoice was issued."

He explained, "The reason why a cash transaction did not take place during the payment process was because the transaction was carried out in a way to write off the debt the company had previously borne."

The prosecution decided not to indict Mr. A due to insufficient evidence, believing that the companies' statements were consistent with Mr. A's and that there was a related contract, so there were no charges.

The prosecution stated the reason for the disposition, saying, “There is no basis to conclude that Mr. A received a tax invoice without receiving goods or services from companies.”

Attorney Jeong In-ho of Daeryun Law Firm, Mr. A's legal representative, explained, "After signing a contract with the manufacturer, Mr. A received the materials through revision of possession (transfer of ownership, maintenance of possession) rather than actual delivery. Regarding payment, the agreement on offsetting claims and liabilities between Mr. A and the representative of the company was completed at the time of issuance of the tax invoice."

He added, "In the case of another company, Mr. A could not afford to pay the transaction price at the time, so he wrote an IOU and received the goods. However, this was also a matter of mutual agreement, and partial repayment was made." He added, "In this case, it cannot be considered that a falsely issued processed tax invoice was created without an actual transaction, so a non-prosecution should be imposed on Mr. A."
 

Go Woori (wego@ikbc.co.kr)

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