NTS to Boost Confidence in Tax Probe

The National Tax Service will include outside experts in choosing taxpayers subject to its tax audit and release the audit standards beginning this year. Also, it plans to introduce new measures under which taxpayers who have been subject to tax audit will participate in revenue officer evaluation. Those who receive low scores to belong to the bottom 10 percent will be excluded from tax audit.

The NTS held an executives’ meeting at the headquarters building in central Seoul and announced such reform measures yesterday.

The NTS will set up an advisory committee for selecting corporations subject to tax audit, which also includes non-governmental experts, in the second half of this year. The committee will come up with guidelines on △how many corporations will be inspected, △which companies should be included in the tax audit, and △which companies can be excluded. The new guidelines will be open to the public.

A source from the NTS said, “We established a similar committee in 2006. But, non-governmental experts were only allowed to give advices at that time. However, they will be given the authority to set and confirm guidelines this time.”

The NTS is also set to introduce customer evaluation system, under which taxpayers evaluate integrity and capability of revenue officers and eliminate those with poor performance records from tax audit. Also, revenue officers will be required to take exams on tax laws and audit regulations on a regular basis. If they fail to get decent records, they cannot take part in tax audit.

The NTS will postpone the tax audit on 210,000 small corporations with annual sales of 1 billion won or less and the self-employed with annual sales of 100 million won or less for three years, unless they fall under tax evasion suspicions. It is also scheduled to relieve burden on taxpayers by establishing specific guidelines on the materials required by revenue officers.

In an effort to help taxpayers, the NTS will explain to taxpayers subject to tax audit why they are chosen, how they would be investigated and what rights they have, prior to tax audits. At the same time, it will let taxpayers subject to tax audit know how the audit has been conducted and how it will go, and provide accounting and tax consulting services after the audit.

Under the new measures, each tax office will be ordered to conduct tax audits on taxpayers living in other districts so as to cut cozy relations between tax payers and tax offices in the same region.

parky@donga.com