ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

Problems and Improvement of Deemed Input Tax for Automobile Dismantlement Recycling Business

  • Kim, Dae Bong Chung-Ang University Law School

Asian Tax Journal Vol. 19 No. 3 (2018), pp. 165-184

Abstract

This study investigates the problems of deemed input tax applied to automobile dismantlement recycling business and suggests legal amendments. This study examines the deficiencies of the Tax Exemption Restriction Act and examines the differences in the amount of tax deductions from the automobile dealers as a case study of the company I operating the automobile dismantlement recycling business. The results of this study are as follows. First, in this study, we estimate the difference in the amount of tax when a used automobile acquired by an automobile dismantlement recycling business is classified as the used automobile sales business. The difference amount of the VAT is 14,117,111 thousand won, and the amount per company is 27,360 thousand won. Second, Tax Reduction and Exemption Control Act stipulates the scope of recycled waste resources. The automobile dismantlement recycling business submits data on acquisition transactions with non－entrepreneurs to the National Tax Service. Therefore, differentiated from other recycling businesses, the purchase tax amount of the agenda should be applied at the acquisition stage of the used automobile. Third, in order to eliminate the effects of redemption and accumulation effects, the provisions of deemed input tax dated December 31, 2018 shall be specifically revised and extended. Fourth, the automobile dismantlement recycling industry should raise the deduction rate of deemed input tax to 10/110, the same as the automobile sales business. This study has contributed in that it estimated the target deemed input tax target of automobile dismantlement recycling industry as a whole by using the data of company I.

Keywords

  • Automobile Dismantlement Recycling Business
  • Value Added Tax
  • Redemption Effect
  • Accumulation Effect
  • Deemed Input Tax.

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