The Formation and Reception of Income Circulating Structure of Korean Corporate Tax
Asian Tax Journal Vol. 16 No. 4 (2015), pp. 123-175
Abstract
In this article the author traces the formation and reception of income circulating structure of corporate tax under Korean Corporate Tax Act(hereinafter referred to as ‘KCTA’). Then why do we have to trace back the foregoing theme? Among our tax law provisions, there are not a few of them which were implanted unquestioningly from foreign law-especially from that of Japan. Therefore there are not a few of provisions which form a Korean tax law provision their raison d'etre being not known. When such a provision is in question, it is needed to trace back the legislative history and research the intent of legislation and interpretation of such provision by the original provision of which we implanted. However in reality it is not the case in most cases. Surely there may be the opinion that the original intent of legislator does not matter. But it can be acknowledged that the research of the original intent and interpretation is the first and important step to rightly interpret the provision in question. For example, § 43 ① of the enforcement ordinance of KCTA regulates that the payment of bonus by way of profit disposal is not qualified as a loss. But such a regulation can be worked under special circumstance of Japan of which commercial act was interpreted to permit such a payment. Also the historical background influenced the differentiated regulation of reserve under KCTA from that under Korean corporate law. Once such a unsystematic clause is legislated then even legislator could not revise it easily for it is ‘existing law’. Therefore if we are to interpret our tax law reasonably and to revise compatible with the whole system, the study on individual provisions from historical perspective is essential. Based on such a critical mind if we look into our academic circumstances such a historical researches is thought to have been extremely scarce. Therefore in this article the author tries to trace back the formation and reception of income circulating structure of corporate tax which is the core of KCTA. It may have meaning as basic work for historical research of individual provisions. The scope of this research is from the first legislation of corporate tax in Japan to 1949, a year when Korea enacted the first Corporate Tax Act of which the fundamental structure has continued to this day and which is very similar to Japanese Corporate Tax Act of 1940. In short the first Corporate Tax Act of Korea is the compressed and receptive result of Japanese legislation which has been developed for a long time.
Keywords
- circulation of taxable income
- corporate tax
- reception of tax law
- legislative history of corporate tax law
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