II. Description of the Schemes
1. The credit card income deduction scheme
A. Overall scheme
The ‘credit card income deduction’ scheme was introduced in September 1999 with the
intent of making public income sources of owner-operators and reducing the tax burden
for salary income earners. More specifically, the scheme was implemented temporarily
until November 11th, 2002 under the Special Tax Treatment Control Act, and the
benefits of the scheme were made available only to salary income earners. In the case of
salary income earners, they exhibited relatively higher transparency in reporting taxable
income compared to owner-operators. Then the issue of equity in taxation depends on
the type of income, i.e. between salary income and business income, under the current
tax system. The government thus felt compelled to come up with an appeasement policy
to resolve this issue