Abstract

Many researchers agree with the fact that the Korean people have low awareness of tax payment and it tends to bring about firstly a situation that does not want to receive tax invoice emphasizing too intimate human relations and secondly the practice of not taking seriously tax avoidance. In addition, income tax is fundamentally based on the assessment standard for value added tax (VAT) and the potential of tax avoidance gets already involved with the start of VAT calculation. For VAT, small businesses intentionally reduce their tax data or even try to get the benefit of simplified taxation and such things have not only distorted the right function of VAT but blocked the progress of healthy taxation environment. As of 2013, 1,779,011 get the status of simplified taxation among the total 5,609,470 VAT taxpayers. When it comes to amount of tax payment, 276.4 billion Won is for the simplified taxation taxpayers and the number accounts for only 0.4% in the sum of 77.929 trillion Won to pay. This study suggests both long and short-term improvements for the current simplified taxation system. For the long-term improvement, the simplified taxation system should be abolished in principle to acquire reliability·transparency of consumption tax regime as revealed in the government's tax system research council of Japan. From it, it seems that the Korean government's policy to gradually reduce income tax deduction rate and tax credit rate when using credit cards or cash receipts is too soon. The opinions to abolish simplified taxation are also dominant in Japan. Accordingly, the Korean government has to discontinue it in order to minimize problems caused by simplified taxation system. The current value-added ratio of 4 steps by business categories (5%, 10%, 20% and 30%) applied to simplified taxation taxpayers does not reflect a real added value ratio. Hence, as a short-term improvement, the adoption of 5 or 10 steps which Japan has taken could be possible. This is also important in terms of fairness among taxpayers and more exact calculation of amount of tax payment as well.

Keywords

• simplified taxation taxpayers
• small businesses
• general taxpayers
• VAT taxation type

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