Effectiveness of the Research & Development Tax Credit and the Temporary Investment Tax Credit in Korea
DC Field | Value | Language |
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dc.contributor.author | 고종권 | - |
dc.date.accessioned | 2021-08-04T06:05:11Z | - |
dc.date.available | 2021-08-04T06:05:11Z | - |
dc.date.created | 2021-06-30 | - |
dc.date.issued | 2003-10-20 | - |
dc.identifier.uri | https://scholarworks.bwise.kr/hanyang/handle/2021.sw.hanyang/74815 | - |
dc.description.abstract | In Korea, The Special Tax Treatment Control Law is prepared to impose taxes fairly and to implement tax policies effectively by through provisions on tax exemptions and restrictions of such benefits with an ultimate view of contributing to development of the sound economy. This law affect corporate spending decisions by altering the after tax cost of some types of investment or expenditures. Targeted rules do not exist in isolation, but as part of the tax system as a whole. This paper analyses the tax effect of the Korean R&D tax credit and the temporary investment tax credit (temporary ITC) by examining the effectiveness of each individually, and their potential influence on the effectiveness of the other using 1982-2000 Korean listed companies data and simultaneous regression model. Korean R&D tax credit was created in 1982 and major adjustments to the R&D tax credit were made in 1987 and 1993. The temporary ITC were first created in 1968 and reenacted during the years 1972-1974, 1980-1982, 1985-1986, 1989-1994, 1997-1998. R&D tax credit and temporary ITC are intended to encourage specific types of investment or expenditures. R&D tax credit is to enhance the international competitiveness by encouraging to perform more research. On the other hand, the purpose of the temporary ITC was enacted to boost the economy by promoting investment in facilities for a certain period. These two credits were made to encourage substantially different activities. Therefore, if policy makers prefer one investment over the other, the composite effect of both credits should be considered and not just separately. The results indicate that the R&D tax credit is effective in encouraging research investment during the periods in which the R&D tax credit ratio changes, period 2(1987-1992) and period 3(1993-2000) relative to the first period (1982-1986). But, contrary to the expectation, the temporary ITC is not so effective in encouraging capital investment. This result in the temporary ITC does not mean the ineffectiveness of the temporary ITC, rather it seems to reflect the business recession during the temporary ITC implementation years. Additionally, the presence of both tax incentives simultaneously does not reduce the effectiveness of the other tax incentives. The R&D tax credit does not negatively influences capital investment and the temporary ITC does not negatively influences research spending. So, there seems to exist complementary effect, not substitution effect between these two different tax credits. | - |
dc.publisher | Asian Academic Accounting Association / Seoul National University, SungKyunKwan University | - |
dc.title | Effectiveness of the Research & Development Tax Credit and the Temporary Investment Tax Credit in Korea | - |
dc.type | Conference | - |
dc.contributor.affiliatedAuthor | 고종권 | - |
dc.identifier.bibliographicCitation | Asian Academic Accounting Association 4th Conference | - |
dc.relation.isPartOf | Asian Academic Accounting Association 4th Conference | - |
dc.citation.title | Asian Academic Accounting Association 4th Conference | - |
dc.citation.conferencePlace | Seoul | - |
dc.type.rims | CONF | - |
dc.description.journalClass | 1 | - |
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