Too Much Additional Tax Charged for Some Taxes

When a taxpayer paid less tax than he or she should pay, the government can charge additional tax anytime within the next five years. On the other hand, when the nation charged a wrong tax, taxpayers ask for the additional money within the next two years to get their money back.

If taxpayers pay acquisition tax required to pay within 30 days of buying a house just one day later the deadline, they have to pay additional tax amounting to 20 % of the original amount.

Experts say that some of the laws on tax are focusing so much on the easy management of the administrative work that some provisions in the law ignore the rights of taxpayers.

The Korean Association of Certified Public Tax Accountants asked the Ministry of Finance and Economy Friday to consider changes in 81 provisions it selected in the tax law when the law undergoes revision this year. The 81 provisions place a tax burden to taxpayers unilaterally or can be unconstitutional.

The association pointed out the problem on the length of period when a taxpayer can file a claim of reassessment for the government`s charge of wrong tax on a taxpayer.

Another problem pointed out by the association is the lack of limits in the amount of additional tax taxpayers should pay. The association, thus, argued that taxpayers can end up paying additional tax more than principal tax. Additional tax means a tax charged on a tax when a taxpayer did not pay or register a tax within a certain period of time.

In particular, the association emphasized that ways to charge additional tax or tax rates vary too much according to the kind of tax. Unreasonably high additional taxes charged on a certain kind of tax are also a problem cited by the association.

For example, additional tax of 0.03% a day is charged for general national taxes such as

value added tax. But when companies fail to meet the payment deadline for withholding tax from employment income tax, companies have to pay additional tax of 10 percent regardless of the number of days for which they did not pay the tax.

20 percent of additional tax is also charged in the same way on local taxes such as acquisition tax, registration tax, inhabitants tax charged according to the level of income tax and registration tax charged according to corporation tax.

Professor Im Ju-yeong with the graduate school of science in taxation of University of Seoul said that the government pursued convenience in taxation too much while putting emphasis on securing tax revenue. The professor emphasized that more focus should be put on lowering the cost for encouraging cooperation in taxpaying than the administration cost for taxation. He also said that provisions in the tax law that are not favorable to taxpayers should change.

Kwang-Am Cheon iam@donga.com