ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

A Study on Tax Privilege of Recycling Industry

  • Ji Sun Chung Department of Taxation, Konyang University

Asian Tax Journal Vol. 9 No. 1 (2008)

Abstract

As our country's rapid economic growth has been bringing vigorous activities of construction and company part since 1960s. So quantity of scrapped materials has been increased greatly in recent years. And recycling of these scrapped materials has a positive effect on the economic status, the protection of environment, and the energy－supplying industry. But the current recycling industry's tax privilege system has been below the level. For example, the rate of deemed input tax deduction changed to 8/108 from 10/110, and has downed again to 6/106 by amendment of the Code. So in－depth studies on recycling industry's tax privilege is needed.Therefore, this study focuses on problems and improvement schemes of recycling industry's tax privilege. So improvements for reforming recycling industry's tax privilege are as follows.First, the rate of deemed input tax deduction must be raised to 10/100 from current 6/106, and the regulating provision about this rate should be transferred to the V.A.T.'s tax law. Second, a limit system of purchase price, that is a newly established by amendment of tax law in the year of 2006, must be eliminated.Third, the regulation method about property liable for deemed input tax deduction, that is now enumerating form in the special tax treatment control law, must be changed to illustrating form.Fourth, EU and Germany's margin scheme can be imported, but this scheme is incompatible with the system of deemed input tax deduction, and additional considerations should be satisfied.

Keywords

  • recycling of scrapped materials
  • deemed input tax deduction
  • accumulation effect
  • redemption effect
  • a limit of purchase price
  • margin scheme

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