Companies wary of heavy fine, penalty fees to be collected next year

Economy-related ministries are set to significantly increase fines and penalty fees that they will collect next year from this year.

According to analysis of next year’s budget plans submitted to the National Assembly, which was conducted by The Dong-A Ilbo on Tuesday, the combined total of fine, penalty fees, and punitive fees that 14 economy-related ministries plan to collect next year amounted to 996.7 billion won (942 million U.S. dollars), or nearly 1 trillion won. This is up about 200 billion won (189 million dollars) from 796.8 billion won (753 million dollars) that they are set to collect this year.

The Fair Trade Commission, which has the largest gain in combined fine, increased its target of fine collection by close to 100 billion won (94 million dollars) from 604.3 billion won (571 million dollars) to 697.6 billion won (659 million dollars). A source at the trade watchdog agency said, “Fine levied for cartels between companies accounts for the largest share,” adding, “Next year’s target has been defined by taking into consideration recent trend in fine collection and other factors.”

The National Tax Service, which planned to collect 71.8 billion won (67.8 million dollars) in fine this year, has more than doubled its target for next year to 149.5 billion won (141 million dollars). The agency predicts it will be able to significantly increase fine collection in the course of bringing underground economy to light by utilizing information from its Financial Information Unit (FIU). For a similar reason, the Korea Customs Service has also increased its target by 12.8 percent from 15.9 billion won (14 million dollars) this year to 17.9 billion won (16.9 million dollars). A source at the Korea Customs Service said, “We expect the value of crackdowns of illegal foreign currency trade by companies to be caught in the process of bringing underground economy to light will increase, and thus increased the amount of fine accordingly.”

The Nuclear Safety and Security Commission has increased fine collection target the most in terms of ratio among different agencies. The commission raised its target for penalty fee collection by 365.7 percent from 67 million won (63,000 dollars) this year to 312 million won (295,000 dollars) next year. “As the commission widely conducted investigation of actual situations due to corruption in the nuclear power sector this year, a more-than-expected amount of penalty fees and others has been collected,” said a source at the commission. “The new amount has been calculated based on the fact that legal punishments have been toughened recently as well.”

In order for the government to increase collection of fine and penalty fees, it should strictly implement law. For this reason, some already worry that companies will suffer hefty burden next year. A source at a business organization voiced concern by saying, “If different government agencies beef up investigation and crackdown, companies will inevitably see their self-motivated economic activities contract.”