Abstract

The purpose of this case study is to analyze the possibility of tax friction and other taxation issues arising between taxpayers and tax authorities for barter transactions by examining the case of M company, a manufacturer and seller of medical devices. This study suggests following improvements to reduce possible tax frictions. First, the basic checks about barter－trading are bond's existence so companies performing barter －trading should confirm bad bond's amount by the VAT report and have contracts, tax bill,account statements, sales management's data. Second, the tax authorities are judging the condition of bad－debt by individual bonds even if barter－trading is not satisfied, so it is necessary to make preparation confirmation or proof of an outside agency, the abolition of the business, missing, insolvency. Third, barter transactions are recognized as the real deal from the tax authorities through fair assessment of bond. Fourth, demanding debt, asset recovery, documents of temporary attachment, abolition in the absence of the property should be proved to be applied to recognize bad debt expense and not to be applied the denial of transactions.

Keywords

• barter－trading
• tax friction

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