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Title 2017 Special Taxation Studies & Guidance

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2017 Special Taxation: Studies & Guidance
June 15, 2017
Revenue Estimates Division II

    Special taxation represents a key fiscal policy tool along with government spending. The need to amend special taxation policies has been raised continuously in an effort to enhance the fiscal soundness of the state. This report provides detailed guidance on special taxation, while offering at-a-glance overview of the background, history of amendments and effectiveness of special taxation.
    The report consists of two chapters, “I. Overview of Special Taxation” and “II. Current Status of Special Taxation by Category.” The first chapter outlines the significance, function, overall operational status and characteristics of special taxation, as well as economic conditions, key changes in tax policies and the special taxation system in ten-year periods from the 1960s to the present. 
    Chapter 2 groups the 274 current tax expenditures into 16 categories to provide detailed information, guidance and statistics for each of the tax expenditures, and presents case studies of tax expenditure in different countries. The special taxation system, comprised of 16 different categories of tax expenditures, is divided into “Key Items” wherein the tax exemption is at least KRW 30 billion, and “Others” wherein the exemption is relatively small. The “Key Items” section of the report deals with basic facts about tax expenditures (i.e. legal grounds, purpose and details , records of tax exemption over the last ten years, enactment date, sunset date, etc.), additional information(i.e. history of amendments, major suggestions put forth by policymakers, the ministry in charge and relevant institutions, results of self-assessment and in-depth evaluations), explanations,  statistics and international comparison.

[Table] Special Taxation: 16 Categories & No. of Items

Category No. of Items Category No. of Items
1. Small or Medium Enterprises 5[3] 9. Stabilization of national living 9[1]
2. R&D 12[3] 10. EITC/CTC 2[2]
3. Investment promotion 8[4] 11. Other direct national taxes 16[1]
4. Employment support 9[3] 12. Indirect national taxes 41[11]
5. Corporate restructuring 29[2] 13. Separate tax laws – direct taxes 26[18]
6. Balanced regional development 24[6] 14. Separate tax laws – indirect taxes 13[6]
7. Support of public service projects 13[3] 15. Other tax expenditure items 9[5]
8. Support of savings 11[5] 16. Transitional provision 46[4]

Note: Figures in parentheses [ ] above refer to the number of special taxation items classified as “Key Items” which indicates tax reduction/exemption of at least KRW 30 billion as of 2016

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