지방이전기업의 조세절감목적 이익조정행위

According to the article 63-2 of the Special Tax Treatment Control Law, firms which relocate their headquarters or plants outside Seoul metropolitan area are fully exempt from the corporate income tax for the relocation year and the subsequent 6 years. Such exemption is equivalent to the 22% point reduction of corporate income tax rate as of 2016 which is much greater than the historical decrease of Korean corporate income tax rates, that is 2-3% point reduction at best. Moreover, the decrease is greater even compared to the reduction of the U.S. tax rate through 1986 Tax Reform Act, which lowered the corporate income tax rate by 12% point. Therefore, it is highly likely that the tax savings arising from increasing the income in the relocation year would exceed the accompanied non-tax costs. Accordingly, this study examines whether firms which have relocated their headquarters or plants outside Seoul metropolitan area engage in the income-increasing earnings management in the relocation year to maximize tax savings. With the sample of 16,609 firm/year observations for the period from 2000 to 2014, we find that firms which benefit from the tax exemption for the relocation increase the income for the first year of exemption, that is the year when they relocate their headquarters or plants. We quantify the amount of tax savings from such earnings management and find that those firms, on average, save about KRW 900 million of corporate income tax through income-increasing earnings management.