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[News] Shared Economy and Taxation Problems
"Sharing Economy" means an economy based on collaborative consumption in which products produced once are shared by several people. In the past, the reuse and collaborative sharing of existing goods, such as flea markets and dirges, had been limited in small communities. This is because the problem of transaction costs and the problem of trust in the other party have not been resolved. Recently, the shared economy has been growing sharply due to the emergence of platform operators, the spread of smartphones and social networking services. The spread of platform operators and smartphones is effectively making the transaction costs that had previously been a problem at zero won, and the development of SNS and the latter phase of platform operators are solving many of the reliability problems for the trading partners.
According to a report released at the PWC in April 2015, the global market size of the shared economy is estimated at $335 billion in 2025, up from $15 billion in 2013. Due to the ongoing global economic crisis and environmental pollution, there are many moves to find answers to future economic growth in a shared economy that recycles resources and other resources, not the current consumption. This shows that a shared economy has not remained within a one-off or small group, such as a flea market in the past, but has continued to occur without restrictions on the subject. In other words, in the past, the shared economy could not be a problem in terms of tax due to the problem of transaction costs and reliability, but recently, with the advent of the shared economy platform operators, the problems of transaction costs and reliability have been resolved, resulting in continuous and repeated suppliers of shared economies, conflicts with existing projects, and problems of taxation equity. In other words, in the past, cases that could be seen as shared economy were either one-off, like flea markets, or they stayed in small communities such as Dulegre. The need for taxation was not raised because the income of these suppliers of shared economies was not large and they were not businessable under the tax code. However, the transaction market created by platform operators such as Airbnb and Uber allowed the suppliers of shared economies to continue to supply shared economies in a timely and retroactive manner, and the scale of shared economies began to grow. Now, not all of the suppliers of the shared economy will have a huge impact on the nation's tax revenues as well as harming the tax assessment.
However, suppliers of shared economies have different motivations for participation in the shared economy, procedures for participation, and business feasibility from existing operators. Shared economy suppliers are engaged in shared economy activities for various reasons. The reasons why shared economic suppliers participate in a shared economy have various purposes, such as environmental protection and community formation among people of the same hobby. These objectives are distinguished from existing projects seeking profit. However, the distinction between "operators" and "non-operators" in the shared economy market is not easy. A common economy supplier can be divided into a shared economy supplier that does not receive a cost of one-off or real-cost without much profit, and, second, a provider of a shared economy will continue to supply more than real-cost, and thirdly, a business operator who continues to operate in the form of an operator under its own calculations and responsibilities for profit purposes. Our current tax office has not yet taxed the suppliers of shared economies on these vague boundaries. This may be because it is not technically easy to identify revenue for a shared economy provider and it is difficult to distinguish between these ambiguous boundaries. However, in the second and third cases above, if not taxed by the supplier, it would be inconsistent with the operator that previously registers the business and satisfies the obligation to pay the tax as the operator. Accordingly, the taxation authority needs to report the details of the platform transactions to the problematic platform operators to identify the income of the suppliers of shared economies of a certain size or higher.
In the United States, taxes were required to be reported and paid if a certain amount of income was obtained from a shared economy by operating a shared economy tax center. In the case of Japan, the government grants a fixed report tax obligation if the side job income exceeds 200,000 yen. In Australia, a certain amount of income is also subject to a tax payment In the Netherlands and France, tourists using Airbnb are levied tourism taxes. In Italy, it also expects a total of 3 billion euros in tax collection in 2025 due to the legislation of a shared economy. In the case of Korea, there is no taxation system for a shared economy. Under these circumstances, if existing tax laws are applied to shared economic suppliers, they are all potential tax dodgers. Under the tax code, a public economy provider can give up its participation in a shared economy if it becomes a tax evader. This could hamper the development of a shared economy as tax laws act as regulations for a shared economy. Korea's taxation authorities need to introduce a system that does not harm the tax balance while not hindering shared economic activities.
First, the introduction of such a system needs to secure tax revenue by selecting the platform operators that are in question of taxation if they fail to create a system that is appropriate for the shared economy. In addition, as a secondary problem in the shared lodging industry, there is a non-taxation provision for the transfer of one house in the first generation. Under the Korean Tax Law, non-taxes are applied on capital gains of 900 million won or less for the freedom of first-generation single-family homes to move If such a first-generation house is used for lodging sharing, there will be a question of whether tax exemptions can be applied. Under the current regulations, first-generation one-house tax exemptions for lodging-sharing suppliers will often result in the loss of tax exemptions. Under the current tax code, there is no provision for the supply of shared economy in the one-generation-to-one housing tax exemption rule, so taxpayers can either give up participation in the shared economy due to the regulation, or tenants may not be eligible for the first-generation one-home non-taxable benefit by using it for the supply of shared economy regardless of the will of the owner's will. To prevent such adverse effects, the tax code needs to create a provision in relation to that case.
"Sharing Economy" means an economy based on collaborative consumption in which products produced once are shared by several people. In the past, the reuse and collaborative sharing of existing goods, such as flea markets and dirges, had been limited in small communities. This is because the problem of transaction costs and the problem of trust in the other party have not been resolved. Recently, the shared economy has been growing sharply due to the emergence of platform operators, the spread of smartphones and social networking services. The spread of platform operators and smartphones is effectively making the transaction costs that had previously been a problem at zero won, and the development of SNS and the latter phase of platform operators are solving many of the reliability problems for the trading partners.
According to a report released at the PWC in April 2015, the global market size of the shared economy is estimated at $335 billion in 2025, up from $15 billion in 2013. Due to the ongoing global economic crisis and environmental pollution, there are many moves to find answers to future economic growth in a shared economy that recycles resources and other resources, not the current consumption. This shows that a shared economy has not remained within a one-off or small group, such as a flea market in the past, but has continued to occur without restrictions on the subject. In other words, in the past, the shared economy could not be a problem in terms of tax due to the problem of transaction costs and reliability, but recently, with the advent of the shared economy platform operators, the problems of transaction costs and reliability have been resolved, resulting in continuous and repeated suppliers of shared economies, conflicts with existing projects, and problems of taxation equity. In other words, in the past, cases that could be seen as shared economy were either one-off, like flea markets, or they stayed in small communities such as Dulegre. The need for taxation was not raised because the income of these suppliers of shared economies was not large and they were not businessable under the tax code. However, the transaction market created by platform operators such as Airbnb and Uber allowed the suppliers of shared economies to continue to supply shared economies in a timely and retroactive manner, and the scale of shared economies began to grow. Now, not all of the suppliers of the shared economy will have a huge impact on the nation's tax revenues as well as harming the tax assessment.
However, suppliers of shared economies have different motivations for participation in the shared economy, procedures for participation, and business feasibility from existing operators. Shared economy suppliers are engaged in shared economy activities for various reasons. The reasons why shared economic suppliers participate in a shared economy have various purposes, such as environmental protection and community formation among people of the same hobby. These objectives are distinguished from existing projects seeking profit. However, the distinction between "operators" and "non-operators" in the shared economy market is not easy. A common economy supplier can be divided into a shared economy supplier that does not receive a cost of one-off or real-cost without much profit, and, second, a provider of a shared economy will continue to supply more than real-cost, and thirdly, a business operator who continues to operate in the form of an operator under its own calculations and responsibilities for profit purposes. Our current tax office has not yet taxed the suppliers of shared economies on these vague boundaries. This may be because it is not technically easy to identify revenue for a shared economy provider and it is difficult to distinguish between these ambiguous boundaries. However, in the second and third cases above, if not taxed by the supplier, it would be inconsistent with the operator that previously registers the business and satisfies the obligation to pay the tax as the operator. Accordingly, the taxation authority needs to report the details of the platform transactions to the problematic platform operators to identify the income of the suppliers of shared economies of a certain size or higher.
In the United States, taxes were required to be reported and paid if a certain amount of income was obtained from a shared economy by operating a shared economy tax center. In the case of Japan, the government grants a fixed report tax obligation if the side job income exceeds 200,000 yen. In Australia, a certain amount of income is also subject to a tax payment In the Netherlands and France, tourists using Airbnb are levied tourism taxes. In Italy, it also expects a total of 3 billion euros in tax collection in 2025 due to the legislation of a shared economy. In the case of Korea, there is no taxation system for a shared economy. Under these circumstances, if existing tax laws are applied to shared economic suppliers, they are all potential tax dodgers. Under the tax code, a public economy provider can give up its participation in a shared economy if it becomes a tax evader. This could hamper the development of a shared economy as tax laws act as regulations for a shared economy. Korea's taxation authorities need to introduce a system that does not harm the tax balance while not hindering shared economic activities.
First, the introduction of such a system needs to secure tax revenue by selecting the platform operators that are in question of taxation if they fail to create a system that is appropriate for the shared economy. In addition, as a secondary problem in the shared lodging industry, there is a non-taxation provision for the transfer of one house in the first generation. Under the Korean Tax Law, non-taxes are applied on capital gains of 900 million won or less for the freedom of first-generation single-family homes to move If such a first-generation house is used for lodging sharing, there will be a question of whether tax exemptions can be applied. Under the current regulations, first-generation one-house tax exemptions for lodging-sharing suppliers will often result in the loss of tax exemptions. Under the current tax code, there is no provision for the supply of shared economy in the one-generation-to-one housing tax exemption rule, so taxpayers can either give up participation in the shared economy due to the regulation, or tenants may not be eligible for the first-generation one-home non-taxable benefit by using it for the supply of shared economy regardless of the will of the owner's will. To prevent such adverse effects, the tax code needs to create a provision in relation to that case.