[Contribution] Lawyers’ value-added tax blocking people’s basic rights requires follow-up measures

The legal procedures for citizens to protect their rights are becoming increasingly complex. We live in an era where it is difficult to seek relief for rights without the assistance of legal experts, not only in criminal cases but also in relatively small-scale private disputes and administrative dispositions. In this situation, the ‘10% value-added tax’ imposed on the cost of hiring a lawyer is a structural barrier that prevents the realization of citizens’ basic rights.

The current Value-Added Tax Act imposes taxes on almost all lawyer services except for public defenders, legal aid, and public tax representation. This is because, unlike education and medical services, legal services are treated as ‘general services’. However, legal services are not the exclusive domain of companies or institutions. For the majority of the general public, especially the economically vulnerable, this tax is a substantial burden that is by no means light.

Based on this awareness of the problem, Rep. Kim Sang-wook proposed the ‘Partial Amendment to the Value-Added Tax Act’ in September last year. The amendment mainly contains content that includes tax exemption for the services of lawyers in small claims cases, criminal litigation procedures, administrative trials, and administrative litigation under the Small Claims Trial Act, and in cases where the parties involved are economically disadvantaged. In other words, it can be said to be a legislative attempt that has a limited but symbolic meaning in terms of protecting the basic constitutional rights of the right to seek trial and the right to assistance from a lawyer.

However, this amendment is close to ‘partial first aid’ for structural problems. This is because citizens' basic rights are not limited to certain types of cases. Even general civil or family litigation can be a matter directly related to survival for the parties involved. However, if value-added tax is still imposed when hiring a lawyer in these cases, the economically vulnerable class will eventually have no choice but to give up legal action due to the financial burden.

Kim Jeong-wook, president of the Korean Bar Association, explicitly pledged to realize ‘value-added tax exemption for lawyers’ compensation’ during his election as president of the association. However, in order for the pledge to be realized, it needs to go beyond mere mention, and concrete momentum and legislative follow-up measures are needed. Now is the time for more structural and responsible action at the association level.

If legal services are recognized as a public good, apart from limited tax exemption measures, a more comprehensive and sophisticated system design must be followed, such as a gradual expansion of tax exemption, a tax refund system, and full tax exemption for basic livelihood recipients. Therefore, the Bar Association has a responsibility to go beyond simply ‘welcoming’ legislation and lead the entire process from passing the bill, specifying the system, and coordinating practical work with related ministries.

Daeryun Law Firm will also contribute substantially to this change. We will first identify the types of cases that are in the blind spot of the value-added tax and lay the foundation for legislative and policy discussions by conducting a national survey and accumulating statistical data. We will accurately understand the reality faced at the forefront of practice and lead to system improvement. Through this, Daeryun will expand the way for citizens to more easily access legal services.

‘Taxes’ should no longer be an obstacle to realizing citizens’ rights. Now is the time to completely reexamine the value-added tax system from the perspective of the public nature of legal services and the guarantee of basic rights.

[View full article]
[Contribution] Lawyer's value-added tax blocking people's basic rights, follow-up action is needed (link)