Gov`t to use financial transcation data for tax audit

Cash receipts should be issued for transactions involving more than 100,000 won (90 U.S. dollars) per case, lower than the current minimum of 300,000 won (269 dollars). Targeting businesses will also be expanded. The Korea Financial Intelligence Unit will provide its financial transactions data to deal with tax audits and investigations.

These adjustments were included in the briefing on the 2013 policy plans to President Park Geun-hye Wednesday morning, which was jointly prepared by the Strategy and Finance Ministry, the Financial Services Commission, the National Tax Service and the Korea Customs Service.

Shedding light on the shadow economy was the major agenda in the briefing. The government‘s financial ministries and agencies seem to wage a war against the shadow economy to secure financial resources for President Park`s welfare pledge.

The Finance Ministry’s report to the president included measures to add about 30 trillion won (27 billion dollars) to tax revenue over the next five years by legalizing the black economy. According to the report, the businesses that should issue cash receipts will be expanded to those with sizable cash transactions, such as jewelry, wedding and moving businesses. Currently, certain business including lawyers` offices, hospitals, private institutes and others have been required to issue cash receipts. Those who should issue electronic tax invoice are also expanded to individual businesses with annual supply of 300 million won (270,000 dollars) from the current 1 billion won (900,000 dollars).

“The government aims to implement measures in late June to legalize tax revenue that has been buried at the shadow economy,” said Kim Hyeong-don, a taxation officer at the Strategy and Finance Ministry.

The Financial Services Commission will amend related legislation within this month to enable to use the data of the Korea Financial Intelligence Unit for tax audit. It will also push ahead once more with a plan to impose taxes on derivatives transactions, such as the futures trading at a tax rate of 0.001 percent and the options trading at a 0.01 percent tax rate.

“The government will eradicate tax evasion prevalent in the Korean society through legalizing the shadow market so as to fund financial resources to carry out the campaign pledges including welfare programs and to integrate our society by improving tax fairness,” President Park said after the briefing.

Meanwhile, the Financial Services Commission will introduce a product of "saving insurance for pension and medical expense" to help the baby boomers born between 1955 and 1963 prepare for the later years.

buddy@donga.com