'2nd Ostem NO' National Tax Service Cracks Down on Illegal Corporate Fund Outflows... Extension of Tax Audit Deferral for Small Business Owners

National Tax Service Confirms and Announces '2022 National Tax Administration Operation Plan' at Nationwide Tax Office Chiefs Meeting

[Sejong=Asia Economy Reporter Kim Hyewon] The National Tax Service (NTS) has decided to strictly respond to antisocial unfair tax evasion acts such as illegal outflow of corporate funds to prevent a recurrence of the ‘second Osstem Implant’ incident. In addition, the scope of verification for the source of funds in real estate transactions by young people with insufficient financial capacity will be expanded from high-priced property acquirers such as commercial buildings to high-value debt repayment persons to catch disguised gift transactions. The tax investigation deferral measures for small business owners have also been extended until the end of this year.

On the 26th, the NTS held a nationwide tax office chiefs meeting and finalized and announced the ‘2022 National Tax Administration Operation Plan’ containing these details. Considering the COVID-19 situation, only high-ranking officials such as regional chiefs attended the meeting on-site at the Sejong Government Complex. About 130 tax office chiefs and others exchanged opinions online through the metaverse system, which was introduced for the first time this year at each office.

This year, the NTS’s key focus areas are largely three: advancing the digital-based taxpayer environment, customized tax support for COVID-19, and strict punishment of unfair tax evasion acts, with no major changes in the overall framework.

Tax verification capabilities will be further strengthened against private profit appropriation by diverting corporate funds or real estate tax evasion acts. This is interpreted as an effort to prevent a recurrence of incidents like the 200 billion won embezzlement that occurred at Osstem Implant and to stop chronic evasion methods such as disguised gifting of houses to children. The NTS will also focus its capabilities on upgrading investigation infrastructure, including securing virtual asset tracking technology, to catch new or sophisticated evasion types that are becoming increasingly cunning.

As the COVID-19 situation prolongs, tax system measures aimed at alleviating the tax burden on small self-employed and small business owners will continue. For businesses subject to gathering bans or business restrictions below a certain scale, non-compensated loss industries, and businesses with sharp sales declines, the payment deadlines for value-added tax and comprehensive income tax will be extended. Park Geunjae, head of the NTS Investigation Planning Division, explained, “We are reviewing measures to reduce the tax burden for about 3.2 million small business owners, including recipients of quarantine support funds, by deferring tax investigations until the end of this year.” Notably, for the earned income tax credit, the second half payment and annual income settlement procedures will be integrated to prevent cases where the payment amount is reclaimed, and the settlement portion will be advanced by more than two months for early payment in June.

NTS Commissioner Kim Daeji emphasized, “We will eradicate unfair tax evasion acts that hinder equitable recovery and strengthen field-centered delinquency tracking activities.” He added, “We will also implement multifaceted customized tax support so that small self-employed and small business owners can recover accumulated damages, and strive to improve the application and payment procedures of the earned income tax credit system and to establish a real-time income tracking system.” Marking the 20th anniversary of the opening of Hometax this year, the NTS will also focus on system advancement by piloting the ‘AI Tax Secretary’ (tentative name), which automates the entire process of filing and payment using artificial intelligence (AI) and big data technologies.