2017 Taxation: Overview & Key Points
June 2, 2017
Tax Analysis Division
Taxation is a financial charge imposed upon taxpayers. In the framework of financial policies, taxes fund public services and enhance the economic capacity of the state. Taxes also play a key role in maintaining the fiscal soundness of the state, especially when there are growing calls for raising fiscal expenditures to address such issues as low birth rates, aging populations or the reunification of the two Koreas. Thus, tax policies should be characterized by fairness and efficiency, and contribute to economic stability and growth, while buttressing the sound management of national finances.
The National Assembly Budget Office (NABO) has published “Understanding and Issues of Taxation” since 2014. The report serves as the basis for studies on tax policies in Korea, and consists of nine volumes, including an overview of taxation, income tax, corporate tax and VAT, outlining debates on the general tax system, tax administration and policies, statistics and current issues.
This year, the report features a new volume, “Local Taxes,” in response to the growing importance of local finances & taxes as local citizens increasingly call for the expansion of public services. In particular, given the ongoing debate on raising local tax revenues, local tax items and tax systems in foreign countries are introduced in detail. In the volume on major national tax items, NABO updated key indicators to reflect the amendment of tax laws and regulations in 2017; elaborated on international trends and regulatory changes, including debates on the US border adjustment tax, the EU Action Plan on VAT and talks on OECD members’ implementation of BEPS Actions; and included the latest tax issues in Korea, such as regulatory improvement in earned income tax credits and child tax credits, and the concept and status of effective corporate tax rates.