Abstract

Former KBS CEO’s dismissal case arose from controversy on whether KBS agreed on a compromise with the National Tax Service (“NTS” hereafter) to pay more taxes than KBS is legally liable under corporate taxation on non－profit corporations. Based on thorough analysis of the case, this study proved that the compromise between KBS and NTS did not bring unnecessary financial loss at KBS as the CEO was accused of. Furthermore, this study suggests practical plans to revise tax laws to help effectively operate non－profit corporations without tax friction as follows. First, wide and comprehensive scope of taxable incomes from profit－making businesses of non－profit corporations should be confined to recurring incomes or defined under negative system, which should be followed by reporting partial financial statements and tax reconciliation for profit－making businesses. Second, the partial financial statements for profit－making businesses should be made under the generally accepted financial principles and externally audited, and comprehensive financial statements for whole businesses should also be made under reasonable accounting principles commonly applied to all types of non－profit corporations. Last, non－profit corporations should be equipped with internal accounting control system, as profit corporations are enforced, for external auditors to review and evaluate their accounting system conveniently so as to guarantee their accounting transparency.

Keywords

• non－profit corporation
• separate accounting
• profit－making business
• internal accounting control system

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