Input 2021.01.06 15:00
Tax audit, 15 days prior notice… The tax period subject to investigation must be announced
At the time of collection, the tax base laws and calculation basis must also be indicated.
Corporate, investment tax credit reform… Remove partitions and increase deductible
Company A, a small and medium-sized company, whose inheritance procedure was ended due to the death of its founder a few years ago, had to suffer from a tax investigation by the National Tax Service for the past few months. This is because a situation where tax evasion was suspected was identified in the process of transferring the company’s shares and assets to the founder’s children. It started with the discovery of suspicious circumstances among tax-related data that the IRS employees looked into extensively during the period of regular tax audits.
The company’s work was on the verge of being paralyzed in response to requests for additional data from the IRS employees who said they would calculate the additional surcharge. After four to five months of investigation, the company was informed that’there was no problem with the taxation. A company executive said, “In a difficult situation with corona, the work was about to be paralyzed by the’Don’t ask tax investigation’ by the National Tax Service.”
From next month, it is expected that the’Do Not Ask Tax Investigation’ by the National Tax Service will decrease. The government decided to add a’tax period subject to tax audit’ to the items of prior notice to be sent to the subject of investigation before the tax audit. It is important information that allows taxpayers to know when a problem occurred, but there has been anxiety that the right to know and the right to defend is not guaranteed because it is not informed.
The government announced on the 5th the’Amendment to the Enforcement Decree of the Tax Law of 2021′ containing these details. This revised bill is scheduled to be promulgated between February 8 and 12, with a legislative notice period until the 21st of this month, and then through procedures such as resolution at the State Council. Through this revision of the tax law, the government included various policies such as reduction of tax audits and tax incentives for companies suffering from the novel coronavirus infection (Corona 19).
With this revision of the enforcement ordinance, the National Tax Service must notify companies of the taxation period subject to investigation, along with the timing of the start of the tax audit and the required period before the tax audit is conducted. For example, in A, the National Tax Service may only request evidence of taxation data for the last 3 or 4 years, which is the period subject to regular tax audits. Even if the tax data for a period outside the scope of the investigation detects unusual matters, the National Tax Service cannot use it for tax investigation. In addition, when additional tax is collected through a tax audit, it is necessary to present the laws and regulations on the basis of taxation and specific facts that form the basis for calculating the amount of taxable, and if there is an additional tax, the type, amount, and basis for calculation must also be provided.
According to Article 81-7 of the Framework Act on National Taxes, when conducting a tax investigation, the National Tax Service shall notify the taxpayer in advance 15 days before the start of the investigation of the subject, period, and reason for the investigation. An official from the Ministry of Finance said, “This revision of the tax law is a measure to ensure the taxpayer’s right to know and defend the results of the tax audit,” and said, “We will continue to formulate policies to prevent serious infringement of the rights and interests of taxpayers related to the tax audit.” .
In fact, there were many voices that SMEs with relatively poor financial power and responsiveness compared to large companies have a greater burden on tax audits. According to the data released by the Small and Medium Business Federation on the 28th of last month, the biggest difficulty SMEs faced with the tax audit was’excessive data demand and deposit’ (20.6%). 17.2% of the respondents also answered’long-term survey’ and’penalty tax and penalties severe’. Next, the unpredictability of target selection (13.4%), conflict of tax law interpretation (12.8%), 9.8% of the survey until the amount to be collected is available, and 8.4% of the difficulty of objecting the results of the survey.
The average rate of omitting prior notice in the 2017 regular tax audit by local tax offices was 4.18%, but Daegu ranked first with 25.36%, and Busan ranked second with 9.09%. This will continue until 2019, with 10.7% in Daegu and 9.94% in Busan. During the same period, the average rate of omitting prior notification was 2.28%.
This revision of the enforcement ordinance also means that the government itself, such as the Ministry of Information, acknowledges that the tax investigation has been abused as a voluntary and powerful means of conduct by tax authorities such as the National Tax Service. A tax attorney who requested anonymity said, “In principle, prior notification is required for tax audits, but we are frequently omitting prior notification to small businesses and small business owners who lack tax manpower or expertise compared to corporate business owners.” “Because this will be strengthened, there is a possibility of reducing the do not ask tax audit.”
◇The investment tax credit partition is removed… 5G investment is an additional 2%P
In order to overcome the Corona 19 economic crisis, the government decided to provide tax credits for companies to invest in tangible assets for business.
First of all, the government has ▲ improvement in productivity ▲ investment in technology for new growth engines ▲ energy saving ▲ investment in research and development ▲ improvement in drug quality ▲ hyper-connected networks such as 5G (5th generation) ▲ safety facilities ▲ environment conservation ▲ worker welfare improvement. It decided to abolish the requirement for investment tax credit. Instead, it decided to establish a new’integrated investment tax credit’ system that integrates into one. All types of business, except for real estate rental/supply business and consumer service business, can receive benefits.
In addition, in order to reinforce incentives for investment expansion, the government applied an additional deduction rate other than the basic deduction for the increase if the investment was increased from the average of the previous three years. For example, the basic deduction rate is’Large companies 1%’,’Middle sized 3%’,’Small and medium sized 10%’, but for the investment increase compared to the previous three-year average,’Large companies 4%’,’Middle size 6%’,’Small and medium sized 13%’ The deduction rate of ‘is applied.
An official from the Ministry of Technology said, “We decided to remove the partition from the facility investment tax credit and provide tax credits such as corporate tax to the acquisition cost of all business tangible assets for the enterprise.” “The reorganization was promoted in the direction of respecting the autonomous decision-making of the company. Features”.
The government is also trying to support companies’ innovative growth. It has decided to reorganize it into 240 technologies in 12 fields, including adding technologies related to the digital and green new deal to the new growth and source technologies. R&D expenses for new growth and source technologies are subject to a maximum tax credit of 40%.
It also strengthens the benefits for U-turn companies. The requirement to reduce the production volume of existing overseas sites by 50% or more was abolished, and tax reductions were decided in proportion to the level of production reduction at overseas sites. There have been voices from the business community that it is difficult to receive tax benefits due to not meeting the requirements for production reduction.
In addition, the government decided to provide additional tax support for the investment of 5G base station facilities by telecommunications companies to activate 5G. To this end, it was decided to apply a preferential tax deduction rate of 2% (P) by including exchange, transmission, and power facilities among 5G-related telecommunication facilities in new growth technology commercialization facilities.