Abstract

On July 1, 1977, Korean government adopted the value add tax(V.A.T.) to simplify the complicated indirect tax structure, a combination of item, reporting procedure and tax rate. According to the result of this study, since 1997, the amendment of exemption regulations of VAT law has reduced principally the exemption scope for the sake of taxation equity, however, the amendment of exemption regulations of Special Tax Treatment Control Law enlarged the exemption scope mainly for the sake of the welfare.Last year the birthrate in Korea already one of the lowest among the 30 member nations of the Organization for Economic Cooperation and Development dropped to its lowest level ever. One of the main reasons behind the declining trend was the fact that the average ages of Korea newlyweds were getting higher. That means more women faced higher chances of infertility. Another factor making couples avoid having children was the high cost of bringing up a child and a lack of childcare facilities. Experts warn if the downward trend continues, Korea may face economic blows from a shortage of workers and lead to lower growth. The potential social costs of a rapidly-growing elderly population also poses concerns. Analysts are calling for new government measures to deal with the shrinking and aging population. In the present situation, the government must prepare to come up with its most comprehensive plan yet to tackle the country’s falling birthrate and aging population.Therefore, we need to support the national welfare by exempting VAT of two areas of goods and services. One is the exemption of the goods and services for the aged and the other is that of the goods and services for maternity and child care.<Key words> VAT(value added tax), exemption tax, welfare.

Keywords

• VAT(value added tax)
• exemption tax
• welfare

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