Tax Deduction for e-business Investment

The government will carry into effect the `electronic taxation bill` system, which enables the commercial transactions through the Internet without the document. When the corporates invest for the equipment of the e-business, the taxes of the corporate will be deducted. And the individuals who are engaged in the e-business transaction will also benefit the deduction of the income tax according to the sales of the companies.

The Ministry of Finance and Economy announced yesterday that the Ministry is to enforce the plan to promote the e-business as soon as the National Assembly passes the amendment bill of the special law for the limited taxation.

Once the amended bill becomes effective, the medium and the small sized enterprises will benefit the deduction of the income tax and the corporation tax up to 5 percent (3 percent for the large enterprises) of the investment price for the e-business.

The investment of the medium and small sized enterprises for the e-business will be accounted as the investment reserve fund, which the corporates have to reserve 20 percent of the business assets.

Meanwhile, the National Statistical Office released the result of its survey that the totality of the e-business had reached 4.5 percent (57, 558.4 billion won) of the total inter-corporate transactions (1,269,533.0 billion won). The data was drawn by the statistical survey on the 1658 e-business corporates, including the corporations registered to the Kosdaq in 2000.

According to the survey, 90.0 percent (52,327.6 billion won) of the total e-business transaction was carried out by B2B, followed by 4,449.8 billion won of the export and 733.7 billion won of B2C.

The total sales of the e-business made up 1.9 percent (23,669.1 billion won) of the gross sales last year. And the purchase formed 6.2 percent (52,327.6 billion won) of the total purchase price.

Park Joong-Hyun sanjuck@donga.com