Discussion on the Introduction of Registration System for Systematic Taxation on Artwork

Abstract

This study examines the current challenges within the taxation system of the Korean art market and proposes introducing an art registration system as a solution. The art market holds cultural and economic significance, and ensuring transaction transparency and a fair taxation framework is critical for building trust in the market and fostering sustainable growth. However, the existing taxation system in Korea faces various limitations, including irrational capital gains tax thresholds, excessive expense deductions, transaction opacity, and inconsistencies with international standards. Particularly, the reliance on self－reporting and the prevalence of informal transactions have perpetuated issues such as tax evasion and money laundering. To address these problems, this study suggests implementing an art registration system that systematically records transaction histories and clarifies ownership transfers, thereby enhancing transaction transparency and taxation effectiveness. The proposed system involves establishing state－led art registration offices to manage transaction records and developing a user－friendly online registration platform to ensure practical implementation. This system aims to prevent tax evasion, achieve tax fairness, and restore trust in the art market by recording ownership changes and transaction data. The key findings of this study are as follows. First, the art registration system can significantly enhance transaction transparency and tax fairness. Systematic management of transaction histories will establish a solid tax base, preventing tax evasion and illegal trades. Second, the system can contribute to revenue generation and strengthen national finances while reallocating collected taxes to support cultural arts and protect artists. Third, by restoring market trust and encouraging active transactions, the system can drive the sustainable development of the art market. Fourth, it will effectively combat money laundering and illicit fund transfers while laying the foundation for taxing emerging digital artworks such as NFTs (Non－Fungible Tokens). This study proposes several practical measures for successful implementation, including enacting legal frameworks, establishing art registration offices, and adopting a phased introduction. Initially, the system should focus on high－value artworks to test its feasibility and effectiveness through a pilot program, followed by gradual expansion. Furthermore, this study emphasizes measures to alleviate artists' financial burdens, such as fee exemptions or reductions for the initial registration of their works, to encourage participation and ensure the system’s stabilization. In conclusion, the art registration system presents an effective solution for enhancing transaction transparency, achieving tax fairness, and restoring trust in the art market. It also provides a robust taxation framework suitable for the digital era, particularly for emerging markets like NFTs and digital artworks. By addressing the structural challenges of the current taxation system, this system is expected to improve the international competitiveness of the Korean art market and serve as a foundation for its sustainable growth.