Korean National Tax Service Promises 'Softly Softly' Approach For Foreign Firms

by Mary Swire, Tax-News.com, Hong Kong

11 December 2003

The Korean National Tax Service plans to present a more ‘friendly face’ to foreign investors by scaling back its tax audits and embarking on a programme of administrative reform.

In a speech given to international business representatives at the American Chamber of Commerce in Korea on Tuesday, NTS Commissioner Lee Yong-sub emphasised the important role that foreign capital plays in the Korean economy, especially if the government is to reach its economic goal of $20,000 income per head within a decade.

Specifically, Lee said the NTS is planning to relax its transfer pricing audits which will be included in a normal audit. In addition, the length of time of tax investigations will be reduced from five to three fiscal years.

"The NTS would not initiate tax investigations into foreign companies unless there is a clear indication of their tax evasion using transfer pricing manipulation," Lee told the delegates.

The Commissioner added that the NTS will have to makes its reasons public on how it chooses a firm to audit, and foreign firms will be given extra time to supply documents requested as part of a tax investigation.

"The NTS will hold more meetings with foreign business communities such as AMCHAM through which it will collect their opinions, ensuring that the NTS accommodates foreign taxpayer needs," explained Lee.

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