Analysis of the 2021 Tax Act Revision

Published on 26 October 2021
Published by Tax Policy Analysis Division

   Recently, demand has been rising for government finance to play a more active role, as the need for new growth engines has increased due to structural transformations in the economy such as digitalization and carbon neutrality, while the vulnerable class faces escalated pressures from the ongoing COVID-19 pandemic. In order to support such fiscal policy, now is the time to make efforts toward streamlining the tax base and rationalizing the tax system.
   The 2021 Tax Act Revision recently proposed by the government is regarded to have incorporated such tax policy environment and pursues measures with a focus on securing next-generation growth drivers, supporting the recovery of jobs, investment and consumption, as well as reinforcing tax support including for low-income groups and small and medium-sized enterprises. In the upcoming regular sessions, diverse issues are expected to be discussed such as investment facilitation, supporting people with low incomes and small business owners, improving tax equity and rationalizing the tax system.
   This report provides a review on areas to consider when examining the Tax Act Revision, including the effects on tax revenues and tax incidence following the government-proposed 2021 Tax Act Revision, updates on the government’s streamlining of tax expenditure, strengthening tax support for national strategic technology as well as raising the minimum income level eligible for workers’ tax credits.