Fund Managers and Patent Attorney Put Newly under Special Watch

The government has decided to classify seven more occupations, including architect, fund manager, notary public and veterinary, as high-income earning professional and put them under special watch for taxation and social welfare purposes. Thus, the National Tax Service and National Health Insurance Corporation will carefully monitor their income sources.

In addition, considering that the self-employed generally pay less tax than regular workers, the government will revise the laws related to the value-added tax, and lower the standard of becoming a simplified taxpayer. For now, if a person is classified as a self-employed since the person records less than 48 million won in gross sale, he or she is entitled to a simplified procedure for filing the tax return.

The Presidential Task Force for the National Agenda submitted a report containing the proposals to President Roh yesterday. President Roh reportedly commented on the report, "It is extremely important to enhance the transparency in taxation. I will be not swayed by popularity. I will aggressively carry the proposals."

▽ High-income professional under special watch = Until now, doctors, lawyers, pharmacists, accountants and CPAs have been under special watch. To the list, seven more jobs are added. Thus, they will have to pay higher health insurance premium starting late this year. Especially, when determined that a false tax return is filed, the authorities will scrutinize the income sources of the person.

When the filed income represents a considerable gap from the actual income earned, National Health Insurance Corporation will report the difference to the National Tax Service, which in turn will launch an investigation into the person.

▽ More tax for self-employed = The authorities will wage an intensive investigation to find out the self-employed who pay less tax than regular workers. As first step, the authorities plans to gradually reduce the number of the simplified taxpayers (less than 48 million in gross sale) and exempted taxpayers (less than 24 million in gross sale), two groups of taxpayers that occupy half of the self-employed.

The National Tax Service will exam the self-employed who have filed false tax returns under the category of simplified taxpayer. Then, it will also revise the relevant laws to lower the "48-million" cutoff line. Furthermore, the government may impose a mandatory reporting obligation on banks as to a certain amount of cash transaction.

▽ 50,000 won spent on credit card deductible = To foster more frequent use of credit card, the government has already modified the Corporate Tax Code and lowered the minimum deductible amount from 100,000 won to 50,000 won. The government will also increase the ratio of the debit card affiliates to credit card affiliates from 21% to 80% by the end of 2004.

Young-Hae Choi yhchoi65@donga.com