Hello! You're looking at a policy document report on Overton

We track government policy, guidelines, think tank research, working papers and more to help our customers see the impact and influence of their work. Are you interested in seeing what information we have to offer? Request a free trial to our platform.

If you fund, produce or manage research or work to influence policy, we'd love to talk. Learn more on our homepage.

Identifiers

doi
10.1596/1813-9450-7936
handle
10986/25945

Can Tax Incentives for Electronic Payments Reduce the Shadow Economy? : Korea's Attempt to Reduce Underreporting in Retail Businesses

Flag for IGO World Bank on January 30th 2017
Awasthi, Rajul, Sung, Myung Jae and Lee, Hyung Chul
Increasing tax revenues by reducing the shadow economy has been a central goal of tax policy and administration in the Republic of Korea since the National Tax Service was established as an independent agency in 1966. This paper examines the Tax Incentive for Electronically Traceable Payments, which was introduced by the Korean tax authorities in 1999 to promote payments made using credit cards, debit cards, and electronic cash receipts in business-to-consumer transactions. The tax incentive allows wage and salary earners to claim tax deductions for eligible purchases made using electronically traceable payments when they file their year-end income tax settlements. The tax incentive scheme greatly contributed to changing the Korean economy into a cashless economy over the past decade and a half. Card payments as a ratio of Korea's gross domestic product have ranked the highest in the world since 2005, reaching 49 percent in 2014. The Tax Incentive for Electronically Traceable Payments scheme has changed th...

Topics in this document

Citations

Cited by 16 other policy documents (6 of them are from other policy sources)