Man who started a paper company and issued false tax invoices, not guilty

Prosecutors say, “Paper companies were set up to avoid taxes”… Mr. A pleads, “We continued operating.”
Not guilty verdict due to detailed documentation including contract, transaction price statement, and delivery details

A man who was put on trial on charges of establishing a paper company and issuing false tax invoices was found not guilty.

Daeryun Law Firm announced on the 12th that the 11th Criminal Division of Suwon District Court found Mr. A, a man in his 50s, not guilty on charges of providing false tax invoices on the 11th of last month.

In 2021, Mr. A was accused of establishing a so-called 'bomb company' that does not supply services or goods to avoid taxes and issuing false tax invoices worth about 3.3 billion won.

In response, Mr. A denied the charges, saying there was no intention to evade taxes. Mr. A's defense is that he established a new company to change the delivery form from an individual business to a corporation, but the contractor put the contract on hold, so the existing business only continued operations by signing a subcontract with the new company.

The court found Mr. A not guilty.

The court said that Mr. A had established a corporate company in the same building and on the same floor as the existing business and that the exchange of services was similar to the services provided to a subcontractor, so there was suspicion that the defendant had issued tax invoices without actual supply. However, the court found him not guilty, citing the fact that documents such as subcontract agreements and building lease agreements, monthly transaction payment statements, and specific delivery details were prepared in detail.

In addition, the court explained the background to the not guilty verdict by saying, “It appears that the employees hired by the corporate company performed the work received from the contractor and even delivered the work accordingly.”

Attorney Park Gyu-seok of Daeryun Law Firm, who represented Mr. A, explained, “According to the Supreme Court precedent, the existence of a physical transaction means that there is a legal agreement between the parties to supply goods or services.” He added, “We were able to prove that there was a physical transaction by emphasizing that the agreement existed based on the fact that the company established by Mr. A was an independent company and that the monthly production and unit price were specified in the documents submitted when requesting the contract payment.”

Reporter Park Chae-ryeong (chae@kyeonggi.com)

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A man who founded a shell company and issued false tax invoices is not guilty (Shortcut)