A Study on Tax Incentives of Small and Medium－Sized Enterprises after the Economic Crisis
Asian Tax Journal Vol. 9 No. 1 (2008), pp. 45-62
Abstract
Since the 1997's economic crisis, the government has enforced some revitalizing policies for Small and Medium－Sized Enterprise(SMEs) centering around venture businesses. policy funds support and tax incentives are those typical examples. The purpose of this research is to examine the effects of tax incentives of SMEs on the basis of the survey of SMEs Korea Federation of Small and Medium Business(KBIZ) from the view point of tax incentives. Specifically, we will analyze how the Korean tax incentive policies have changed before and after the economic crisis; in addition, we will examine whether the tax load has actually decreased since the crisis. Moreover, we will investigate the reason why tax incentive programs have been poorly applied and activated. We will also find out the most frequently used tax incentive systems. Finally, some suggestions will be made in order to improve the tax incentive programs for the Korean SMEs. Making full use of the SMEs tax incentive every year turned out to be beneficial for the financial position improvement. The primary reasons for the low application of tax incentives are that some applicants are not qualified for the program and that others are not aware of the details of the system and its application processes. This research, on the ground of this analysis, has made several suggestions: the extension of application range, the simplification of tax support system and its application through relaxing restrictions of tax reduction, and the automatic program to calculate the tax saving relating to the SMEs incentive systems. This study is valuable to the effect that we have evaluated the SMEs incentive systems of the past and have made suggestions for improvements in the future, verifying that the effect of tax incentive programs has increased since the economic crisis.
Keywords
- tax incentive
- tax burden
- tax reduction
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