National Tax Service collects 7 trillion won tax ill-gotten last year

In the last three years, the number of tax investigations decreased but penalty tax collected increased. This means that tax probes have been vigorously made and the size of probe has increased.

According to materials submitted Wednesday by National Tax Service to leading Saenuri Party Rep. Kim Tae-ho who is member of National Assembly`s Planning and Fiscal Committee, tax penalty collected by the tax agency through investigations reached 7.01 trillion won (6.5 U.S. billion dollars) last year, accounting for 3.6 percent of the agency`s total tax revenue. In 2011, 18,110 cases of investigations were made to a collection of 6.19 trillion won (5.76 billion dollars). Last year had 800 billion won (743 million dollars) more collected from 2011 despite a decrease in the number of investigations. Additional tax collection in 2011 surged by more than 1 trillion won (929 million dollars) year-on-year. Tax penalty collection is notably increasing.

The ratio of tax penalty collection to total tax collection by National Tax Service has also increased. Penalty gathered increased from 3.33 trillion won (3.1 billion dollars), or 2.2 percent, in 2009 to 5.13 trillion won (4.7 billion dollars), or 3.1 percent, in 2010, to 6.19 trillion won (5.7 billion dollars), or 3.4 percent, in 2011. 2012 marked the third straight year of tax penalty collection increase.

A National Tax Service source said, "The reasons are intense tax probes and focused investigations into large companies and wealthy people suspicious for tax evasion." The tax agency will reduce tax investigations on small and mid-sized companies to ease their burden. The state tax agency says it will carry out tax probes this year on last year`s level, meaning the number of cases will remain similar but the amount collected will increase.

Kim said, "Since tax investigations are intensifying, the targets need to be clarified so as not to hamper corporate activities. In the longer term, the share of institutions eligible for probe should be raised to induce voluntary tax payment."