NTS, Not Abolishing Special Tax Investigation

National Tax Service (NTS) officially the continuation of special tax investigation that economic circles have demanded for abolishing.

Through the report submitted to Chung Eui-wha, GNP parliament member of Financial & Economic Committee of national Assembly, NTS insisted, “it is too early to abolish the special tax investigation considering under the circumstance of underdeveloped trading practice such as groundless trading, structural tax avoidance etc.”

NTS said, “Special tax investigation is practiced mainly on habitual faithless taxpayers and on unlawful tax avoidance incomers such as private loan business and property speculation.” And “In the future, NTS will extend investigation on the violation and restrain special investigation.”

However, the economic circles refuted NTS’s insistence. They insisted that under the circumstance of the misuse and abuse of special investigation for political purposes, it is impossible to operate business freely without abolishing the investigation itself.

Some party says that increasing revenue by tax investigation may be benefits in short-term, but it will discourage the will to pay tax. So it is very harmful.

One person related to A Economic Research Institute said, “Special tax investigation has been practiced excessively and basic rights have been infringed many times under this government.” and “So the existing special tax investigation system should be abolished or reformed fundamentally not to be abused for political purposes.”

The Federation of Korean Industries (FKI) insisted through the report published in last month, “Tax investigation has been practiced by NTS’s own will many times for political purpose; on the collection of an election campaign fund, settlement of the separation of pharmacy and clinic, etc. And special tax investigation is very likely to infringe basic rights. So it should be abolished.” And it added, “A tax investigation with procedural fault is illegal, so there should be a system that a taxpayer can reject the investigation. Additionally, imposition of taxes by illegal procedure should be stated as invalidity or withdrawal.”

Special Tax Investigation; a practice on the base of tax information and concrete tax avoidance suspicion as judging difficult to find out by normal investigation method. In this case, omission of an advance notice and request of voluntary presentation are possible.

Jeong-Hun Park sunshade@donga.com