A Study on Tax Support for Social Economic Activation
Asian Tax Journal Vol. 19 No. 5 (2018), pp. 81-114
Abstract
The purpose of this study is to examine the major foreign tax support system and current tax support system for social economic activation proposed as a policy task after the launch of the new government, and to present a desirable tax policy direction and effective tax support plan. The social economy refers to activities carried out by organizations such as cooperatives and social enterprises, which are economic activities in the private sector that simultaneously generate social and economic values. In the United States, the United Kingdom, and Canada, tax incentives are also provided to investors and investors in terms of social economic activation, such as local community development. As a result of analyzing the application of the tax support system in the current 「Restriction of Special Taxation Act」 by dividing the social economic organization into the form of corporations and non－corporations, it is more taxable to establish a social economic organization in the form of corporations. This can impede fair competition depending on the type of organization among these organizations. In particular, in order to promote the investment of corporations such as venture companies, there are various tax support systems such as income deduction and dividend income tax exemption, but there seems to be no other tax support system other than the designated donation in order to promote the investment of social economic organization. First, the tax support policy for social economic organization should be provided in the way of giving tax benefit to investors or investors in terms of effectiveness and equity with venture companies. Second, It will be necessary to create the same tax environment so that these organizations can compete fairly. In order to revitalize the social economy in accordance with the direction of the tax policy, the tax support plan from three viewpoints is as follows. First, in order to encourage investors’ investment in social economic organizations, tax support is required to exempt income tax exemption on dividends, dividend income tax exemption, and equity transaction. In addition, it is necessary to allow a tax deduction for the contribution or investment of the social economic fund to a certain extent and to set up a tax credit system in order to promote the contribution of the social economic organization to the cooperative according to the special law. Second, to facilitate the purchase of goods or services produced by a social economy organization, it is necessary to allow a certain amount of tax deduction for a certain period of purchase price. Third, in order to enhance the legal stability and predictability of the social economic organization, Article 135 of the current 「Local Tax Exemption Restriction Act」 should be amended and linked with Article 85－6 of 「Restriction of Special Taxation Act」. In this way, this study contributes to the tax policy direction to promote the social economy which is the policy task of the government which is aimed at the ‘people－centered economy’, and to suggest the taxation support method specifically for the investment promotion of the social economic organization.
Keywords
- Social Economy
- Social Economic Organization
- Restricted Tax Act
- Contributor or Investor
- Cooperative
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