National Tax Service Shortens On-Site Audit Period and Establishes 'Pre-Taxation Legality Review Meeting'

Innovative Measures for Survey Administration

The National Tax Service (NTS) has decided to shorten the duration of on-site tax audits and minimize requests for document submissions to reduce the burden on taxpayers. Additionally, it will introduce new procedures such as hearings to listen to taxpayers' explanations and briefing sessions to explain audit results, initiating comprehensive innovations in the tax audit process.

On the 16th, the NTS announced the "Investigation Administration Innovation Plan" containing these measures. Since the second half of last year, the NTS has been diagnosing and seeking improvements in audit administration through the operation of the "Due Process and Proper Taxation Task Force (TF)" and has prepared this plan accordingly.

First, if accounting is transparent, there is little suspicion of tax evasion, and taxpayers actively cooperate in submitting documents, the period of on-site audits?where tax officials visit in person to ask questions and conduct investigations?will be reduced to 50?70% of the total audit period. This aims to lessen the burden on taxpayers. The NTS plans to pilot this at the Seoul and Jungbu Regional Tax Offices for regular tax audits until the end of this year and, after addressing any improvements, expand it to all offices.

The prior notification period has been extended to 20 days before the start of the audit (previously 15 days) in response to concerns that "taxpayers do not have enough time to prepare thoroughly for tax audits." This applies to regular tax audits of corporate businesses with annual revenue under 50 billion KRW and individual businesses under 10 billion KRW.

The "Guidelines for Document Submission Requests" have also been revised to prevent excessive document demands during tax audits and reduce the burden on taxpayers. Reflecting taxpayers' feedback that "excessive document requests are the biggest difficulty during tax audits," broad document requests are generally prohibited, and document request lists will be systematically managed to require only the minimum necessary documents.

The NTS introduced the "Investigation Manager Hearing," where the audit manager directly listens to the taxpayer's explanations or difficulties and communicates with them, and the "Audit Result Briefing Session," which accurately informs taxpayers of the audit results and provides detailed explanations.

Furthermore, to conduct in-depth reviews of tax assessments that may restrict taxpayers' property rights, a "Pre-Taxation Legality Review Meeting" has been established within the regional tax offices' investigation departments. For major tax issues where there is disagreement with the taxpayer, the investigation team, review team, and expert group will thoroughly examine the tax law and evidence, and the head of the investigation department will decide on the taxation.

An NTS official stated, "We have innovated the entire tax audit process by incorporating the voices of the public and field officials to reduce taxpayer burdens while raising the standards of due process and proper taxation. By strictly adhering to the principles of due process and proper taxation throughout the tax audit process and thoroughly protecting taxpayers' rights, we will realize 'tax audits trusted by the public' at the frontline."

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