National Tax Service Commissioner: "Reducing Tax Audits for SMEs and Small Business Owners... Expanding Simplified Audits Focused on Consulting"

Kim Hyun-joon, Commissioner of the National Tax Service, is delivering opening remarks during a meeting held on the 9th with 13 participants, including the chairpersons of the Korea Federation of Small and Medium Business and related organizations.

[Asia Economy Reporter Kwangho Lee] On the 9th, Kim Hyun-joon, Commissioner of the National Tax Service, stated, "We will significantly reduce the number of tax audits on small and medium-sized enterprises (SMEs) and small business owners compared to previous years, and further expand simplified audits focused on consulting."

On the same day, Commissioner Kim held a meeting with 13 people, including Kim Ki-moon, Chairman of the Korea Federation of SMEs, the federation's chairpersons, and heads of related organizations at the Korea Federation of SMEs. He said, "If taxpayers request a postponement or suspension of audits due to damages caused by the novel coronavirus infection (COVID-19), we will actively accept such requests."

Commissioner Kim explained, "We will actively support companies' efforts to revitalize the economy through cautious and restrained tax audit operations. Although we are aware of concerns from many businesspeople that tax administration, including tax audits, will be strengthened due to deteriorating revenue conditions, tax audits account for only a very small portion (less than 2%) of the National Tax Service's revenue. Therefore, it is impossible to strengthen tax audits solely to secure revenue."

However, he emphasized, "We will respond more strongly to malicious tax evasion that exploits the national crisis to illicitly obtain profits and evade taxes."

Commissioner Kim also mentioned, "So far, the National Tax Service has provided tax support totaling 5.64 million cases and 21.4 trillion won in scale by promptly extending the deadlines for corporate tax in March, value-added tax in April, and comprehensive income tax in May, as well as by paying wage income year-end tax adjustments and value-added tax refunds earlier than the statutory deadlines to support SMEs affected by COVID-19."

He added, "Going forward, we will continue proactive tax support centered on dedicated response teams established at the headquarters, regional offices, and 128 tax offices nationwide. Additionally, we will operate the pre-review system for research and manpower development tax credits effectively and implement the SME tax consulting system to proactively resolve tax uncertainties for SMEs, thereby actively supporting research, development, and innovative growth."

Chairman Kim expressed, "Policy consideration from the National Tax Service is necessary to help SMEs overcome the crisis caused by COVID-19. There is a need to temporarily defer tax audits until the pandemic subsides to alleviate businesspeople's anxiety and boost morale."

He also requested, "Please shift the paradigm of national tax administration from a penalty-focused tax imposition system to one that supports incentives for SMEs who faithfully pay taxes."

In response, Commissioner Kim said, "We will continue tax support that can provide practical help and actively consider relaxing application requirements such as sales after analyzing the performance of SME tax consulting operations. We plan to defer tax audits as much as possible for SMEs facing business difficulties, such as small business owners and companies affected by COVID-19."

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