1. Tax Disputes in Korea Jooheon Lee 2019. 9. 20. Partner at Yulchon LLC.
International Association of Korean Lawyers
2019 Annual Conference, Seoul
Tax Disputes in Korea
Jooheon Lee
Partner at Yulchon LLC.

2. 1. Tax investigation(when?)
Periodic selection
Companies with KRW 100 bil. annual income or more every 5 yrs
Suspected to be non-compliant based on periodic compliance analysis
Occasional selection
Fails to fulfill his/her tax compliance obligations
Suspected of false transactions
Concrete information on a taxpayer’s tax evasion
Evident material to admit a suspicion of omissions or errors in tax return
Taxpayers bribing a tax official or helping a bribery

3. 1. Tax investigation(procedure)
Advance Notice (or Notice of tax investigation)
Investigation (inspection of documents, inquiry, etc.)
Closing
Request for
early decision
Request for Pre-assessment review
(20 days)
Notice of Tax Payment
(30 days)
(exemption of penalty taxes)
Review by NTEC
Notice
on result

4. 1. Tax investigation(Recent trend)
Deeper for Conglomerates
Improvements of system
Relevant
Organization
(FIU, FSS, etc)
infra for information on overseas
evasion
heavier
inspection
Tax experts needed
Pool of experts on diverse areas
systemization
Training of investigation experts
Additional burden
Focusing on revenue hikes
No further negotiation

5. 1. Tax investigation(Recent trend, cont’d)
Less cases, Heavier investigation
Financial investigation, information from FIU
Increased seizure of account books and computers
Simultaneous audit with trade partners or relevant companies
Increased information
Sharing of information inside investigation units
Information exchange on overseas tax dodge(ex. MCAA)
External informers like KCS, FTC, FSS
Specialization
Pool of experts on each field
Experts on international audits or high-tech incl. computers
Increased prosecution
More complaints with prosecution against tax fraud accusers
Increased filing for even simple non-compliance with tax return

6. 2. Dispute resolution procedures
▣ Overall structure
Self-Assess/
Reporting/
Payment
Tax Imposition
- adm decision
<advance remedy>
Judicial Relief
Nat’l Tax – Doctrine of Exhaustion
(cf. Local Tax)
Administrative Relief
NTS examination
Tax Tribunal adjudication
Board of Audit & Inspection examination

7. 2. Dispute resolution procedures
▣ Non-judicial review
Request for Pre-assessment review
(competent regional tax office)
Reconsideration appeal
(competent regional tax office)
Appeal for review
(NTS)
Courts
Adjudgment request
(Tax Tribunal)
(90
days)
Examination request
(BAI)
(filing in 30 days after preliminary notice & decision within 30 days)
(filing within 30 days after notice of disposition & decision within 30 days)
(filing within 90 days after notice of disposition or notice of reconsideration appeal decision & decision within 90 days)

8. 2. Dispute resolution procedure
▣ Judicial review
Courts handling tax litigations
Special Panels
or Divisions
Seoul Adm Ct
District Ct
High Ct
Supreme Ct
(Tax Law Division)
Seoul Administrative Court
Seoul High Court

9. 2. Dispute resolution procedures
▣ Statistics
(2017)
No. of cases submitted
No. of cases settled
Acceptance ratio(%)
Reconsideration appeal
3,309
3,159
24.4
Administrative relief
Appeal for review
440
453
27.8
Adjudgment request
5,237
5,116
27.3
Examination request
169
125
4.8
Judicial relief
1,466
1,842
11.4

10. Thank you for your attention!