National Tax Service Audits 116 Firms

The National Tax Service (NTS) has begun a tax audit of 116 companies with more than 30 billion won in annual sales on suspicions of tax evasion.

“We began sample investigations into large conglomerates which are suspected of tax evasion after analyzing tax data from last year’s corporation tax filings,” an NTS spokesperson said. “We will take necessary measures, including imposing a penalty tax, if our suspicions are confirmed.”

Those investigated include 12 affiliates of large conglomerates which posted less than 30 billion won in annual sales but that are suspected of tax evasion in transactions with their parent companies.

The tax agency will analyze multiple types of tax evasion and industries with companies that committed tax evasion within the sample investigation, and compare its analysis results with the tax returns of other companies in the same industries when corporation tax returns are filed in March. If there is any problem, the NTS will conduct an investigation.

The tax agency explained that the companies being investigated include not only the construction industry, which is known for tax evasion, but booming industries as well, including semiconductor, electronics, shipbuilding and automobile companies.

The business community refrained from commenting on the measure, but said the investigation is probably being conducted to secure tax revenue.

Han Sang-ryul, the director of the investigation team of the NTS, said, “The aim of the tax audit is not to pressure corporations but to realize fair taxation,” adding, “Tax revenue will increase as a result, but society will faithfully pay taxes when large conglomerates set an example of faithful tax payment. ”

The audit is being conducted according to guidelines set by the National Research Program (NRP) of the U.S. Internal Revenue Service, a program being introduced to the Korean corporate tax audit process for the first time ever.

The NTS intends to increase the focus of its investigation by utilizing the results of the sample survey as an indicator, while reducing unnecessary regular investigations.

Keuk-In Bae bae2150@donga.com