• Journal of Industrial Convergence
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• v.8 no.1
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• pp.49-64
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• 2010

Penalty tax of basic law that has been revised in December 30, 2006 has been amended to tax 40 percent on no report and under-reporting in unjustifiable way. This revision is a punitive regulation that reflects the national tax service's will to not sit back and watch taxpayers' intentional tax evasion by imposing a heavier tax burden, and it raised penalty tax rate that has been applied leniently compared to foreign countries. Therefore, this study examines how changes in penalty tax rate affected faithful tax report and in what level the punitive penalty tax rate should be legislated so that the effect of the penalty tax rate can be maximized by performing empirical analysis on the effect on income tax rate reporting standard of self-employed businesses before and after the time the penalty tax rate increased dramatically from 33.3% to 300% based on the items.

• Journal of Technology Innovation
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• v.5 no.1
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• pp.181-205
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• 1997

There has been considerable controversy over the impacts of the tax credit on R&D expenditures in many countries. Korea has adopted various kinds of tax credit system to stimulate private firm' R&D expenditures. Korean government, Recently, is trying to reform tax system to reduce tax credit programmes according to Uruguay Round agreement and in line with OECD policy standards. The purpose of this paper is to analyze the effectiveness of current tax credit system on technology innovation in Korea and derive some policy implications over tax reform. In this paper, firstly, I investigate the size of tax reduction effects from each program in theoretical models and simulate the actual rate of individual tax incentive to a unit of R&D expenditure. I find that theoretically the reserve fund for technology development program has given the largest tax reduction effects to private firms irrespective of the R&D incentive system reform. Tax credit on R&D expenditure also has been very effective instrument to firm's tax reduction. Secondly, I try to measure the effectiveness of tax credit through the estimation of effective margianl tax rate between with the system and without the system of credit on R&D expenditure during the tax credit reform periods. I find that the tax credit on R&D has lowered firm's investment cost since the system introduced. I also have strong results that there has been a positive relation between the fluctuation of firm's R&D expenditure and the change of effective marginal tax rate. I suggest that it is better to sustain the system of tax credit on R&D for a while to increase firm's R&D expenditure.

• Journal of Convergence for Information Technology
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• v.10 no.1
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• pp.75-81
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• 2020

This study analyzed the annual difference of firm's book income, taxable income and BTD that before and after the 2009 corporate tax rate cut and 2018 corporate tax rate increase. ANOVA analysis was performed for each item by year, and post hoc was performed after homogeneity test of variance. The research results are as follows. First, the book income at corporate tax rate cut was higher than taxable income, and BTD in 2008 was significantly different from other years. Second, the book income at corporate tax rate increase was less than taxable income, and BTD in 2017 was also significantly different from other years. In other words, the firm is performing appropriate profit adjustments to reduce of tax burden when the corporate tax rate changes. Because of this, the BTD in the year immediately before the corporate tax rate change is different from other years.

• Journal of Industrial Convergence
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• v.2 no.1
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• pp.23-46
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• 2004

Tax exhaustion effect hypothesis says that firms with low expected marginal tax rates on their interest deductions employ less debt in their capital structure. We use logit analysis to study how financing decision is related to tax after controlling non tax effects. We treat non debt tax shields as proxy of marginal corporate tax rates which affect the probability of using the deductibility of debt tax shields and empirically test the tax effect on financing decision in Korea. In conclusion, we provide evidence that debt financing is positively related to tax in the former sub-period. This results partially support for tax exhaustion effect hypothesis and low tax rate firms have lower debt levels than high tax rate firms.

• KDI Journal of Economic Policy
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• v.24 no.2
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• pp.53-82
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• 2002

Earlier papers, regarding this topic, have shown that the optimal environmental tax rate under the second best situation typically smaller than that under the first best world, the well known Pigouvian tax. This paper casts a doubt on the generality of this result, since the conclusion was derived from the models which employed rather strict assumptions on the utility function, which is homothetic and separable. This paper, with simple-static CGE model, shows that the result of earlier studies is sensitive to the assumption on the utility function. According to the simulation results, as previous studies pointed out, if the utility function is assumed to be homothetic, the optimal environmental tax rate is smaller than the Pigouvian tax. In contrast, if certain type of non-homotheticity is allowed, the optimal environmental tax rate could be greater than the Pigouvian tax. The results of this simulation also imply that the enlargement of environmental tax base could enhance the efficiency of overall tax system. Hence, there will be a less burden to share for the tax authority from the policy change.

• The Journal of Asian Finance, Economics and Business
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• v.6 no.4
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• pp.45-52
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• 2019

The current study aims to investigate the relationship between tax avoidance and firm risk in an emerging market called Iran. The study population consists of 400 observations and 80 companies listed on the Tehran Stock Exchange (TSE) over a five-year period during 2012 and 2016. The statistical model used in this study is a multivariate regression model; besides, the statistical technique used to test the hypotheses proposed in this research is panel data. The results showed that low effective tax rate (tax avoidance) is more consistent than the higher effective tax rate. Moreover, there is no significant relationship between tax avoidance and future tax rate volatility. The findings also proved that lower effective tax rates are positively associated with future stock price volatility. This implies that since Iranian firms have many financial problems because of economic sanctions, they have a tendency to delay the disclosure of bad news about their firms. Needless to say, when a huge number of negative news reaches its peak, they immediately will enter the market and lead to a remarkable fluctuation in stock prices.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.1
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• pp.81-90
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• 2020

We examine the effects of the complexity of tax-related information on the issuance of analyst's pre-tax income forecast and its value relevance. If analysts respond adequately to the needs of investors, they are more likely to provide a pre-tax income forecast. The provision of a pre-tax income forecast may indicate analysts' confidence in assessing the quality of earnings. Thus, investors, in turn, would be more confident in the analysts' pre-tax income forecasts if analysts provide both pre-tax and earnings forecasts than only the latter. Using a sample of Korean listed companies for 2005-2014, we find that analysts are likely to provide an implicit tax forecast when the volatility of the effective tax rate is low and the book-tax differences are small. We also find that when analysts provide pre-tax and after tax income forecasts, the value relevance for unexpected earnings increases. These results indicate that analysts are likely to be interested in corporate tax information and the complexity of tax-related information affects the availability of implicit tax forecasts. Furthermore, this study provides empirical evidence that when analysts provide both pre-tax and after tax income forecasts, investors have more confidence in analysts' earnings forecasts, which results in greater investors' responses.

• Asia-Pacific Journal of Business
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• v.12 no.2
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• pp.115-129
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• 2021

Purpose - This study aimed to clarify the effects of tax investigation probability on accounting transparency in KOSDAQ firms by using financial statement. In particular, it was analyzed whether the characteristics of a firm's listed market have a discriminatory effect on the relationship between the tax investigation selection rate (or detection rate) and earnings management. Design/methodology/approach - This paper examines analyzed the effect of tax investigation of the National Tax Service on the earnings management. The sample includes 9,603 firms listed on KOSPI and KOSDAQ from 2011 to 2018, all of which are manufacturing firms. This study conducted correlation and multiple regression analyses to verify the relationship between tax investigation probability and earnings management. The possibility of a tax investigation is the selection rate and the detection rate, and the profit adjustment was estimated at discretionary amount. Findings - As a result of empirical analysis, both firms listed on KOSPI and KOSDAQ markets showed that the higher the tax investigation rates, the more significant the possibility of reducing the earnings management of discretionary accruals. Additionally it was found that in KOSDAQ markets firms, the tax investigation detection rates had a signigicant nagative effect on discretionary accruals. Research implications or Originality - It can be interpreted that firms with a high rates of receiving a tax investigation decrease earnings management consideration of expenses such as additional tax amount due to the tax audit or a decline in corporate image.

• Environmental and Resource Economics Review
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• v.32 no.4
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• pp.217-238
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• 2023

Currently, automobile tax in Korea is imposed by multiplying the vehicle's engine displacement by a certain tax rate. However, the need for revision is being raised as it is pointed out that the current system does not reflect the immediate task of reducing greenhouse gas emissions. Accordingly, this study focuses on the positive relationship between engine displacement and CO₂ emissions, and seeks to calculate an appropriate automobile tax rate considering average CO₂ emissions. To this end, first, we estimated the average annual CO₂ emissions (kg/vehicle) for each engine displacement using the average CO₂ emissions for each vehicle displacement as of 2020. Next, multiple scenarios were analyzed considering the standard tax rate at $75 per ton of CO₂ emissions proposed by the IMF (2019). In particular, we compared the case of imposing a uniform carbon tax of $75 and the case of imposing a progressive tax based on CO₂ emissions by displacement. According to the results, it was confirmed that the uniform tax rate proposed by the IMF is difficult to apply to Korea as it is due to the impact of a decrease in tax revenue, and a tax scheme needs to be designed appropriately considering maintenance of tax revenue according to the current automobile tax, greenhouse gas reduction effect, and automobile tax reform trends in developed countries. For example, in the case of the K3 (1,598cc) of Kia Motors, a representative compact car sold in Korea, if we compare the tax burdens for each tax scenario, the tax burden will be about 220,000 KRW under the current system, about 79,000 KRW under the uniform tax rate, about 83,000 KRW under the progressive tax rate, and about 240,000 KRW under the progressive tax rate similar to the UK tax system, respectively. In this way, this study identified the current statuses of automobile registration and tax in Korea, and automobile tax reform trends in major developed countries, and analyzed the impact of automobile tax reform considering engine displacement and CO₂ emissions, focusing on the tax burden of the people.

• Environmental and Resource Economics Review
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• v.9 no.2
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• pp.393-420
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• 2000

Since the transportation taxes were imposed on gasoline and diesel in 1994 for the purpose of financing the special projects, such as the construction of highways or railroads, the rates have been frequently and rapidly changed in case of need to stabilize prices or secure public fund, contrary to its own purpose. This paper presents a theoretical model for a special purpose tax based on the minimization of the dead weight los incurred by the imposition of the tax. A computable static model for the tax rate is developed and estimated for a various range of target level of total tax rebenue. The results shows that, under tax revenue of 40 trillion won, the rates for the year of 1999 are 385.2 won for one liter of gasoline and 198.4 won for one liter of diesel. The estimated gasoline rate is no more than about 59% of the current rate. However, the rate for diesel turns out to be 24% higher than the current level.