Impacts of IFRS on corporate tax legislation: with special reference to South Korea's Reforms

Abstract

Many countries have recently pursued IFRS adoption. However, even after adoption, accounting practices are continuously influenced by national GAAP and country-specific peripheral systems; this can interfere with fulfilling the IASB's central objective. Further investigations are needed to clarify systems that can regulate the effects of IFRS adoption. When South Korea adopted IFRS, it positioned IFRS adoption as a part of its national economic strategy; it aggressively pursued measures to ensure the smooth transition to IFRS, including the revi-sion of peripheral regulations. As a result of various related efforts, South Korea is now expecting to see an improved perception of reliability with respect to the financial statements generated by South Korean companies, as well as South Korea's enhanced status in the international accounting community. Based on these facts, this study analyzes the 2010 revision to the Korean Corporate Tax Act and its effects on accounting practices. More specifically, it aims to examine the revision with respect to PPE depreciation and the Definite Settlement of Accounts Approach-the latter of which has been considered the most problematic aspect of IFRS adoption. The experience of South Korea convinces us that it would be possible to develop systemic responses to IFRS application.