Abstract

The new tax law which will be imposed to the reserve which remained in the corporate not been consumed as investment, salary, dividend has been passed by the national assembly. There were controversies for and against the new tax. And the dispute for the detailed enforcement is still progressing. Despite of the active discussion, it is hard to find the research that analyzes the problem and seeks improvement proposal. In this regards, We have predict the tax burden with 4 different scenario and evaluate the new tax in this research. According to the analyzation for the expected tax burden, 584 companies will pay 713 billion(about 1 billion per company) for next 4years in Scenario 1, 1,21 companies will pay 2,870 billion(about 2.3 billion per company) for next 4years in Scenario 4. The portion of the companies which affiliated to the 10 Group is 38.6~42.4%. But the phenomenon that bias to the type of business is not observed. Next, We have analyzed the effectiveness of the tax. We mainly have evaluated the effectiveness of the tax and seeked the way for reducing the risk aversion. According to the analyzation for the effectiveness, a company will pay 10 billion as new tax averagely. A company has to invest 10billion for the new business equipment or raise the salary for the employees same amounts not to be subject to the tax. But the solution is not to easy to execute. Also, companies will avoid the tax using the various methods like intercompany transaction. And even if companies pay much dividend, the income transfer effect would be insignificant due to the high share ratio of the foreign investers and institution investers. To reduce company’s risk aversion and to encourage the investments, we suggest to extend the carry-back NOL, and to make up the partnership taxation to freely decide the ratio of income-loss distribution.

Keywords

• Taxation on Corporate retained earnings
• Mutual investment restriction business groups

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