Reasons for Proposal
With the introduction of the national bounty program for reporting tax evasion and borrowed accounts in 2013, public scrutiny of tax evasion has been active. As a result, the number of reprots and amount of tax additionally charged have soared, thereby contributing to the expansion of fiscal revenues as well as legalization of underground economic activity.
In 2015, however, the Supreme Court held that it is an illegal re-investigation that after having investigated only specific headings of taxable items of a suspected cheater, etc., the National Tax Service conducts a tax investigation into the remainder except for the already investigated parts in the same taxable year.
After this ruling, even when the National Tax Service identifies suspicious tax evasions for certain items or transactions via reports, etc., it can only investigate by integrating the entire taxable items subject to the duty to return and pay in accordance with Article 81-11 (Principle of Integrated Investigation) of the Framework Act on National Taxes, and thus cannot handle efficiently the information on tax evasion under limited time and personnel; the number of unaddressed cases continues to accumulate, causing trouble to the tax administration.
In addition, unlike in the past when the tax investigation used to be focused on specific items in question, taxpayers now could become unreasonable victims of the tax investigation conducted by tax authority into the entire items of tax.
Therefore, this Amendment aims to improve the protection of taxpayers and the efficiency of the tax administration by providing a legal basis on which tax officials partially investigate only specific headings of taxable items for taxpayers who are suspected of tax evasion, and then, if necessary, can investigate the remainder of the same tax year except for the investigated parts (Article 81-4 (2) 6 and 81-11 (2) newly inserted).
Major Provisions
Allow tax officials to partially investigate only specific headings of taxable items for a suspected cheater, and then in the future if necessary, can investigate the remainder of the same tax year except for the investigated parts (Article 81-4)
