Abstract

Many disputes arise between taxpayers and the tax offices regarding the exemptions from capital gains taxes for the agricultural land cultivated for more than 8 years, and for the agricultural land substitution. Most of the disputes arise from the tax offices’ denial for the tax-exemption requests by the taxpayers. Some disputes may result from the false requests by the taxpayers or deficit of the documents, others may result from the unclearness of the provisions and the lack of systems to verify whether the taxpayers farmed the land personally. This study analyzed the problems of the tax-exemption system for the agricultural land cultivated for more than 8 years and for the agricultural land substitution, and suggested some improvements as follow. First, the concept of cultivation is ambiguous and in need of clarification. Especially ‘permanent farmer’, ‘farm work’ and ‘the labor of tax payer’ should be defined clearly. Second, the tax -exemption for the agricultural land substitution shouldn’t be applied to the land not cultivated for more than 5 years, and the agricultural land newly acquired should be cultivated for more than 5 years. And the maximum amount of tax-exemption also should be raised from 100 million won for one year and for 5 years to 200 million won for one year and 300 million won for 5 years. Third, the regulation that the tax-exemption applies to the taxpayers who live in Si, Gun, Gu or the connecting Si, Gun, Gu should be abolished. And the limitation of the distance in straight line might be lengthened more than 20 kilometers. Fourth, the tax -exemption should be endowed to the land used for livestock raising. Fifth, it is provided that the tax-exemption for the agricultural land substitution is applied only to the substitution by the agricultural need. But the taxpayer cannot get the tax -exemption if he does not farm the land personally for a certain period. So the agricultural need provision might be deleted in order not to cause a confusion. Sixth, the area requirement and the price requirement for the new land acquired by substitution should be raised. Seventh, it’s not easy to verify the taxpayers’ cultivation with the documents provided in the regulations. So, the regulations should be amended towards collecting as many as documents supporting taxpayer’s cultivation. And it should be compulsory for tax officer to study taxpayer’s cultivation on the spot.

Keywords

• cultivation
• agricultural land
• substitution
• capital gains tax
• tax－exemption

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