Abstract
Coronavirus (COVID－19) outbreak in Wuhan, China in December 2019 and spread rapidly around the world. The lockdowns brought a major disruption to world trade and lowered the utilization rate of companies, which dampened corporate investment and consumer sentiment of households. Accordingly, countries have implemented economic recovery and stimulus policies along with health and quarantine responses to COVID－19. The purpose of this study is to analyze the tax policies implemented by each country related to COVID－19 response and provide policy implications. In detail, this study provides policy implications by analyzing the current status of tax support measures in a total of 123 countries compiled by the OECD as of May 29, 2020.
The analysis results can be summarized as follows. First, as a tax item active in the tax policy, corporate tax support was the most frequently used at 17.21%, followed by VAT at 11.59% and income tax at 10.58%. Second, as a result of analysis by policy purpose, the tax support for immediate response to the damage caused by COVID－19 was the highest at 95%, and only 4.2% for the purpose of economic recovery. Third, the timing of tax policy announcement is concentrated in mid－March 2020 to the end of March 2020 when 66.7% of tax support policies were announced. Fourth, the types of tax policies were classified into tax administration measures, tax reduction and exemption, tax support for economic recovery, and tax support for health and medical care. Fifth, tax expenditure and liquidity support in countries around the world, announced by September 11, 2020, is estimated at about $11.7 trillion, accounting for about 12% of the world’s average GDP.
Therefore, the policy implications of this study are as follows. First, it is necessary to selectively provide additional support to directly affected industries. As in other countries, active support is required for industries that have been directly affected by national lock－down policies (e.g., tourism and aviation－related industries). Second, it is necessary to implement a tax policy centered on employment and investment promotion. Tax experts say it is necessary to set the direction of tax policy for job creation and maintenance, corporate investment promotion and liquidity support for economic recovery. In addition, it is necessary to consider cases from other countries, such as Australia’s accelerated depreciation of depreciable assets, tax cuts and exemptions for education and training institutions for unemployed in Portugal, and the expansion of loss carry－back and carry－over implemented in United States and seven other countries. Third, in a situation where there is great concern about the increase in national debt due to fiscal expansion, a policy to expand tax base and tax source transparency should be accompanied to prevent adverse effects on tax policy. Lastly, it is necessary to consider overseas cases such as reduction of income tax for medical workers, accelerated depreciation of medical equipment, and consumption tax exemption on imported products such as medicines and medical equipment.
The analysis results can be summarized as follows. First, as a tax item active in the tax policy, corporate tax support was the most frequently used at 17.21%, followed by VAT at 11.59% and income tax at 10.58%. Second, as a result of analysis by policy purpose, the tax support for immediate response to the damage caused by COVID－19 was the highest at 95%, and only 4.2% for the purpose of economic recovery. Third, the timing of tax policy announcement is concentrated in mid－March 2020 to the end of March 2020 when 66.7% of tax support policies were announced. Fourth, the types of tax policies were classified into tax administration measures, tax reduction and exemption, tax support for economic recovery, and tax support for health and medical care. Fifth, tax expenditure and liquidity support in countries around the world, announced by September 11, 2020, is estimated at about $11.7 trillion, accounting for about 12% of the world’s average GDP.
Therefore, the policy implications of this study are as follows. First, it is necessary to selectively provide additional support to directly affected industries. As in other countries, active support is required for industries that have been directly affected by national lock－down policies (e.g., tourism and aviation－related industries). Second, it is necessary to implement a tax policy centered on employment and investment promotion. Tax experts say it is necessary to set the direction of tax policy for job creation and maintenance, corporate investment promotion and liquidity support for economic recovery. In addition, it is necessary to consider cases from other countries, such as Australia’s accelerated depreciation of depreciable assets, tax cuts and exemptions for education and training institutions for unemployed in Portugal, and the expansion of loss carry－back and carry－over implemented in United States and seven other countries. Third, in a situation where there is great concern about the increase in national debt due to fiscal expansion, a policy to expand tax base and tax source transparency should be accompanied to prevent adverse effects on tax policy. Lastly, it is necessary to consider overseas cases such as reduction of income tax for medical workers, accelerated depreciation of medical equipment, and consumption tax exemption on imported products such as medicines and medical equipment.
| Translated title of the contribution | Tax Policy Trends and Evaluation in Response to COVID－19 |
|---|---|
| Original language | Korean |
| Pages (from-to) | 97-119 |
| Number of pages | 23 |
| Journal | 세무와회계저널 |
| Volume | 23 |
| Issue number | 1 |
| DOIs | |
| State | Published - 2022 |
