Abstract

Non-profit corporations, corporations under the tax reduction, corporations under the reorganization have increased steadily. Therefore, the necessity of separate accounting also has increased. The corporate tax law in Korea provides the regulation of separate accounting in fragments, however, taxpayers apply the cases by the tax administration (National Tax Sservice), not the law. Many previous studies have focused on non-profit corporations, so research on separate accounting from more various perspectives cannot be found easily. This paper is to find the problems and is to suggest proposals on separate accounting from various perspectives. Two improvements are suggested for the flame of separate accounting. One method is to provide separate regulation for each case of separate accounting. Another is to provide overall regulation of all cases of separate accounting. This studies suggests the first method, because each organization for separate accounting has different features, and other nations accept this method. Also, some mistakes of reference and using different terms must be revised. The regulations of separate accounting of the attributed earnings on trust estate must be provided. The tax law must be more clear classification criteria on individual income and common income. Also, the allocation methods for the common income should be provided. In Korea, usually sales volume are used for allocation the common income. However, other reasonable criteria must be provided for each income, and the criteria must be used continuously and can be changed by the approval of the tax administration. In addition, the tax form on sectional profit and loss statement has some problems. Because IFRS has been implemented since 2011 in Korea, the forms on income statement are not same among the Korean corporations. Thefore, the uniform methods for the forms must be provides, but the corporations accepting the IFRS can prepared their forms according to their income statement forms. This paper may suggest proposals on the separate accounting from the various perspectives, which cannot be found in the previous studies. As the suggestions of this study may be reflected in the current Korea tax laws, the regulations on the separate accounting will be clear. Therefore, the friction between taxpayers and the tax administration is expected to be decreases in future.

Keywords

• separate accounting
• sectional profit and loss statement
• common income
• individual income
• non－profit corporate

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