National Tax Service

Background
for the Implementation of the System

Toward
a tax culture where honest taxpayers are respected and taxes are willingly paid,
the NTS has introduced the Exemplary Taxpayer System.

A
compliant taxpayer recognised to have filed an honest tax return within the tax laws will be designated as an Exemplary Taxpayer. We are to reward
Exemplary Taxpayers with various benefits such as providing a three-year
exemption from tax audit.

The
Exemplary Taxpayers are designated among those candidates nominated by the citizens,
the taxpayers themselves or the audit bureau.

The
former Honest Taxpayer Award System which was closed-door system and carried
out on the Taxpayer\'s Day (March 3), mostly recommended by the tax bureau, is
now improved and various methods for recommending honest taxpayers are introduced.

This
system applies to both Korean companies and foreign invested companies including
foreign companies. Last year this system was applied mainly for domestic companies,
and we plan to expand it to cover foreign invested companies that exhibit a
high-degree of integrity.

Especially,
when a taxpayer is recognised for its accurate reporting of income during the
tax audit, the tax audit will be stopped immediately and the audit bureau will
actively recommend the taxpayer as an Exemplary Taxpayer for reward.

□ Comparison
with the former Honest Taxpayer Award System

□ Criteria
: Companies who meet the following conditions and who are approved by Exemplary
Taxpayer Review Committee

• Taxpayer who
  has continuously operated its business more than 5 years


• Taxpayer who
  has continuously reported tax income in the black for 3 years


• Taxpayer who
  has never transacted disguised/fictitious data for 3 years


• Taxpayer with
  reported taxable income fairly large for 3 years


• Taxpayer with
  no record of having delinquent taxes (including the representative\'s) for
  3 years


• Taxpayer who
  is confirmed to have no intentional tax evasion as a result of tax audit


• Taxpayer who
  has reported taxable income with honesty when compared with other tax payers

□ Designation
procedure

□ Preferential
treatment for『 Exemplary Taxpayer』

• Exemption
  of tax audit for three years


• Relief
  of required collateral level when providing grace period in collection and
  extending the tax payment due date


• Place
  in the priority list of recommending for government reward candidates on
  Taxpayer\'s Day


• Providing
  a preferential treatment in airline service (VIP membership card issued
  by KAL, ASIANA)


• Kookmin,
  Shinhan Bank\'s VIP customer service


• Allowed
  to use「Window for Exemplary Taxpayer Only」in taxpayer service center of
  district tax offices


• Other
  additional reward items are being discussed

□ Future promotion
plan

Recommendation
system by audit bureau considering the result of tax audit is in progress, and
recommendation by citizens or application by taxpayers themselves will be welcomed
at any time. Designation for the Exemplary Taxpayer will be periodically made
based on very stringent procedure and criteria. This system will be continuously
adjusted and improved.

*
Foreign companies that honestly report their income would be actively sought
and rewarded.