Focus on the High Income Earners

Investigation into the high income earners, who have professional occupations and own independent enterprises, is beginning in order to determine whether they declared curtailed incomes as a measure to pay less income tax. On November 13, according to the Ministry of Health and Welfare, the National Pension Cooperation (NPC), the National Health Insurance Cooperation (NHC), and other organizations, the NPC recently shared the income earners’ data with the National Tax Service (NTS) and has made investigations into the large income earners such as specialists and owners of independent business.

A high-level NPC official disclosed the plan as following, “The NTS handed over the income earners’ data last month. We are planning to investigate the high income earners to see whether they correctly declared their numbers by comparing NTS’s data with NHC’s data until the end of this year.” He added, “ From July, the companies which employed less than five workers will be changed from ‘Local’ status to ‘Company’ status for governmental information purposes. We will intensively look into the experts who have changed into ‘Company’ by the end of this year.”

From July, businesses with 1-4 employees have to change their form of admission to workplace. Therefore, large income earners such as doctors, lawyers, accountants, licensed tax accountants, pharmacists, patent attorneys all have to newly declare their income taxes.

Currently, the workplace members’ premium (9 percent, one’s share is 4.5 percent) is fixed at a higher rate than that of the local members’ (7 percent). The number of local members of the National Pension is 9,950,000, and the number of workplace members is 6,870,000 as of the end of September. Doctors and lawyers declared to the NHC different numbers (two or three times) than they did to the NPC, according to a report submitted to inspection of the administration team conducted by the National Assembly. Lawyers declared an average of 10,070,000 won/ month to NHC and 3,300,000 to NPC. Doctors also declared average of 6,820,000 won/ month to NHC and 3,290,000 to NPC. An official of the Ministry of Health and Welfare said, “We can levy additional taxes to the prosecutor if he or she had declared curtailed income on purpose, and we will notify to the National Tax Service for a tax investigation if his/her suspicion is obviously disclosed.”

Dong-Won Kim daviskim@donga.com