제목 없음□
Background
○ Last year, the
National Tax Service(NTS; Commissioner Yongsup Lee) announced 「2003
Tax Audit
Policy Directions」for corporate taxpayers and individual taxpayers on July
1,
2003 and July 23, 2003 respectively in the course of tax administration reform.
○ The mission of
tax administration reform is to make a Trustworthy National Tax Service
through
Fair Taxation and Transparent Tax Administration.
○ In this regard,
NTS announced comprehensive「2004 Tax Audit Policy Directions」for all
kinds
of taxpayers for the first time in NTS history, through the review of the Tax
Administration Reform Committee on June 10, 2004.
○ The Directions
include the candidate selection criteria for tax audits and the outline of the
NTS\' audit management based on the analysis of the tax returns attributed to
tax year 2002.
- These
Directions will be applied until the next year\'s directions are published.
□
Basic Principle of the Directions
○ The basic purpose
of a tax audit is to establish a voluntary self-assessment system by
spreading
the idea that compliant return filing from the beginning is in one\'s favor rather
than being audited intensively.
○ Therefore, the
basic policy of tax audit management hereafter will be focused on making a
tax
climate to encourage voluntary tax compliance as well as collecting evaded taxes
from
each taxpayer.
- NTS
will operate tax audits fairly and transparently in accordance with tax laws
and
principles.
○ Tax audit policies
are equally applied to both domestic and foreign companies without
discrimination.
○ NTS has been
striving to create a better investment environment for foreigners.
- For
this, NTS is actively catering the needs of foreign companies, and managing
tax audits
fairly and transparently to reduce the audit burdens on honest foreign
companies.
□
Candidate Selection Criteria for Tax Audits and the Ratio of Selected Taxpayers
○ Tax audit candidates
this year are those taxpayers who demonstrated low compliance
based on the result
of taxpayer compliance assessment which is conducted through the
computer-based
assessment system, and whose tax returns have not been audited for a
considerable
period of time.
- This
selection will be determined objectively and scientifically based on the NTS
computer
system.
○ The ratio of
taxpayers to be audited will be reduced to the minimum necessary to
encourage
tax compliance, reducing NTS\' intervention in taxpayers\' daily business
activities.
○ NTS will, however,
heighten audit intensity on those selected for tax audit and thoroughly
collect
the evaded taxes.
□
Improvement of the Transfer-Pricing Audit System
○ In principle,
a tax audit focusing only on the transfer pricing issue will not be conducted
unless there is a clear indication of tax evasion or the period for the tax
authority to assess
taxes is almost expired by the statute of limitations.
- Instead,
a transfer-pricing audit will be incorporated into the course of routine corporate-
tax
audits.
○ The number of
business years subject to an audit on transfer pricing issues will be
shortened
from 5 to 3 reducing audit burdens on taxpayers in providing requested
documents.
○ Before a tax
assessment by a district or regional tax office on transfer-pricing audit is
finalized, the headquarters of the NTS will review its validity in advance to
preclude
unreasonable tax assessment and enhance consistency among taxpayers.
□
Tax Audits to be Conducted in a More Flexible Way
○ Expansion of「In-Tax-Office
Audit」
- To
ease the audit burdens, NTS will apply the「In-Tax-Office Audit」to foreign
companies
that are estimated as relatively honest by conducting the audit in
the tax office rather than
the company\'s office.
○ Minimizing the
period for field audits
- If
a tax audit is not settled only in the issues on international transactions,
NTS will
increase the application of「Step-by-step Audit Closing System」.
- If
a taxpayer under audit has no indication of tax evasion, NTS will withdraw the
auditors
from the taxpayer\'s office and the audit will be closed before the
audit period is terminated.
- The
companies, which have been audited in the recent 2 years, will be exempted from
tax
audits unless there is a clear indication of tax evasion, to reduce the
inconveniences
arising from frequent audits.
○ Minimizing the
amount of documents to be submitted, and allowing sufficient time to
submit
offshore documents
-
NTS will try to minimize the amount of documents to be submitted by conducting
a
preliminary audit thoroughly.
- Foreign
companies will be given sufficient time to submit offshore documents requested
for the audit.
□
Designation of an Exemplary Taxpayer and Benefits Rewarded
○ In case the result
of a tax audit reveals relatively high level of compliance, the concerned
taxpayer
will be designated as an Exemplary Taxpayer and will be rewarded with various
benefits such as exemption of tax audit for 3 years.
□
Protecting the Taxpayers\' Rights through the「Tax Audit Service Center」
○ Dedicated duty
officers are assigned in the「Tax Audit Service Center」to deal with tax
problems
of foreign taxpayers during a tax audit in a fair and transparent manner.
- Main tax issues
arising in tax audits will be discussed at the「Tax Disputes Committee」to
raise
consistency and adequacy of tax assessments on cross-border transactions.
□
Precluding False Assessments Through the「Tax Administration Real Name System」
○ NTS has initiated
the「Tax Administration Real Name System」for the prevention of false
assessments
and the protection of taxpayers\' rights.
- Under
this system, all tax administration processes such as assessments, appeals and
collections are accumulatively computerized in the name of the officer in charge
of each
process, and the officer is regularly evaluated through this system.
□
Introduction of the「Prompt Review System」
○ NTS will relieve
compliant taxpayers from their uneasiness by resolving ambiguity promptly
and
spot tax evaders at an early stage by monitoring tax returns through the「Prompt
Review System」so that an audit will take place not too long after the filing
of returns.
- With
the set up of this system, an audit on a taxpayer would be conducted within
2 years
from the date the return is filed, which is currently 3～5 years.
