earticle

영어

Generally, small traders face relatively higher costs in complying with the obligations imposed under the VAT than do general taxpayers, and the tax administration has to incur relatively higher costs in enforcing the tax on them. For these and other reasons, most countries with a VAT exclude small-scale traders and producers with an annual turnover below a specified amount from the obligation. Under the Korean VAT system the small firms( called special taxpayers ) have to be granted special treatment because of their inability to cope with the requirements to register, furnish returns, and pay tax, or to keep prescribed records. But the existing Special Taxation System still retain many defects despite the several statutory amendments thus far made. In the public at large the most debated issue centers on the inequity in the tax burden between qeneral taxpayers and special taxpayers. It is an open secret that in Korea taxpayers cheat on their sales not to evade the VAT but to evade personal and corporate income taxes. For this reason, this study proposes the abolition of Special Taxtion System in lieu of an adjustments. Thus the small-firm exemption have to change from the deduction of tax amount to the basis of sales amount. In addition, or in lieu of the turnover exemption, small firms have alternative schemes for simplifying the calculation of the VAT liability or reducing that liability.