Regular Tax Audit Target Companies Raised from 150 Billion to 200 Billion Won in Revenue

Starting next year, the revenue threshold for corporations subject to regular tax audits every five years will be raised from 150 billion KRW to 200 billion KRW.

According to authorities on the 7th, the National Tax Service recently finalized a partial amendment to the corporate tax administrative regulations after discussions with the National Tax Administration Reform Committee. The amendment will be implemented from January 1st next year following an administrative notice period.

The amendment includes raising the revenue threshold for corporations subject to the five-year cyclical audit from 150 billion KRW to 200 billion KRW. This increase in the threshold comes about five years after it was raised from 100 billion KRW to 150 billion KRW in January 2019.

The National Tax Service is adjusting the cyclical audit criteria to reflect economic growth and corporate sales expansion. This aims to maintain an appropriate audit scale and improve the quality of regular audits.

With the relaxation of the cyclical audit criteria next year, the number of companies subject to regular tax audits is expected to decrease compared to this year. It is estimated that there are about 700 companies with revenues between 150 billion KRW and 200 billion KRW as of last year.

Corporations with revenues below 200 billion KRW are not subject to cyclical audits but may undergo tax audits based on compliance analysis. The National Tax Service conducts audits starting with companies that show low compliance after analyzing whether corporate taxes were properly and timely reported.

Even if a corporation has reported its corporate taxes faithfully, if it has not undergone a tax audit for an extended period, it may be classified as a "long-term uninspected corporation" and be subject to an audit.