Automatic Notification of Large Cash Transactions

The National Tax Service announced that it would completely abolish special tax probes on corporations and politicians for a political purpose.

The NTS will be informed of financial institutions making large cash transactions as early as next year and also reinforce enhancement measures for accounting probes to investigate tax evasion cases more efficiently.

National Tax Service Commissioner Lee Yong-seop held the first meeting with the Taxation Reform Committee consisting of civic groups and 28 experts, further announcing a “Draft of Reform Direction on Taxation”.

The committee, headed by Commissioner Lee and Park Won-sun, head of the Executive Committee of People’s Solidarity for Participatory Democracy, will decide on specific reform measures by the end of this month and propose them to related ministries including the Ministry of Finance and Economy.

Commissioner Lee said, “To make the taxation system more transparent, we will stop conducting special tax probes with political purposes. Seoul Regional Tax Office Division 4 will not conduct tax probes at the request of the Presidential Office or by special order from the Commissioner.”

The National Tax Office will push for a compulsory notification system of large cash transactions by financial institutions to curb illegal inheritance practices.

To this end, the Office will submit a revised bill on the real name system for financial transactions and reinforce the law starting early next year.

The standards of compulsory notification will be determined during the revision process. In the U.S., transactions over 10 thousand dollars are automatically reported.

The Office will also push ahead with measures to combine digital data of the Korea Federation of Banks or Korea Financial Telecommunication & Clearing Institute for efficient tax evasion investigations.

Jin-Hup Song jinhup@donga.com