ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

The Amendment of Input Tax Deduction on the Value－Added Tax on Building Reconstruction and Redevelopment Project Union

  • Seungsick Park Hyupsung University
  • Hwang, Myung－Cheol Seoul Digital University

Asian Tax Journal Vol. 12 No. 2 (2011), pp. 491-522

Abstract

Most residential houses of large cities in Korea are constructed as wide range residential areas due to a lack of residential land. And most apartments are being reconstructed and redeveloped to improve residential environment from a city－planning perspective. However, the regulations and interpretations related to accounting and tax laws on maintenance projects are not clear yet. This study aimed to review conflicting opinions and the interpretation and judgment cases of the taxation office based on major national taxation of the commercial reconstruction and redevelopment maintenance project union, to extract problems and find solutions. First, this study suggest that Enforcement Regulations No. 8 of Value Added Tax Act need to be amended to an Enforcement Ordinance. Commercial reconstruction and redevelopment projects are actually co－projects of union members, and the union is just a subjective taxation unit to calculate income. Second, there is a need for clear interpretation and make difference between the house reconstruction union and commercial reconstruction union. I suggest that the special tax treatment control law, section 104, para. 7, No. 3 clause is applied for only housing development union,except commercial reconstruction union. The housing reconstruction and redevelopment union has members of the end consumer, but commercial reconstruction union doing a man of enterprise. Third, Being the union and union members one, the union is delivered tax invoice from contsructions company and has a deduction of input tax, but does not deliveries union members. It is regarded of union members' deducting input tax. The union member receives a residence that is taxable in the year and trades goods or services as a man of enterprise in the future and has a payment of sales tax, and should pay for taxes for a reasonable and non－deficient tax law. By adopting more than one way to enforce among the above suggestions, the position of tax authorities or the union and union members will have the same economic effect. In order to deduct or refund of input tax for non－violation on property rights of taxpayers(union members),it is suggested to revise the VAT and take a clear view as precedent.

Keywords

  • reconstruction and redevelopment project union
  • VAT
  • deduction of input tax

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