In the preliminary examination for tax credits for research and human resources development expenses, the National Tax Service announced that the contents of the company reviewed during the examination will not be used for other business purposes such as tax investigations later.
Lim Gyeong-soo, head of the R&D tax support TF team at the National Tax Service, stressed, “We will never use the data for the tax audit.”
The National Tax Service explained that the data prepared during the examination is a system that only the person in charge of the preliminary examination can read.
It also made it clear that there is no need to report R&D results to the National Tax Service in order to undergo a tax credit review.
This paper reported in an article on the 22nd, covering the concerns of companies responding as the National Tax Service formalized the organization for the preliminary examination of tax credits for research personnel development expenses and initiated a preliminary examination for tax credits for R&D expenses.
As a result of this report, it was found that small and medium-sized SMEs, in particular, had a burden on this, asking whether they should report their R&D results to the National Tax Service in order to receive tax credits for research and manpower development expenses.
In addition, there were concerns that the National Tax Service would use the company’s information identified during the review process for future tax investigations.
Accordingly, it is said that some tax representatives are encouraging small and medium-sized enterprises to “don’t accept”, saying that the R&D investment tax credit screening is “scratched for no reason” to the National Tax Service.
In accordance with Article 9 (10) of the Enforcement Decree of the Restriction of Special Taxation Act, companies receiving tax credits for research personnel development expenses are obligated to prepare and store proof documents such as R&D plans, R&D reports, and research notes for 5 years.This is linked to R&D performance reports. It seems that companies are aware of it.
Im Gyeong-soo, head of the R&D tax support TF team at the National Tax Service’s corporate tax department, confirmed on the 22nd in a phone call with this magazine that “there is no need for a company to report on research results to the National Tax Service for research and personnel development expense tax credit review.”
It is explained that the examination of the National Tax Service is to examine whether the research personnel development expenditures expenditures by the company meet the tax credit requirements, not the research results.
Lim said, “The research results (even if the research failed) have nothing to do with the tax credit examination,” and said, “Companies do not have to worry about this.”
The National Tax Service explained that the’preliminary examination of tax credits for research personnel development expenses’ was introduced to support taxpayers who have difficulty in applying for deductions by confirming the appropriateness of tax credits for research personnel development expenses in advance, and to relieve uncertainty about whether or not to deduct. Are doing.
However, for companies, it is not a burden because it is expected that national tax officials will check the R&D site during the screening process.
Regarding this, the National Tax Service explained that it was set in the internal view regulations so that reports written by the staff in charge during the preliminary examination of tax credits for research personnel development expenses were never used for other tasks.
Team Manager Lim said, “The data created during the tax deduction review are systemized so that only the person in charge of the pre-examination can view it.”
He emphasized that “we will never use the examination data for tax audit selection.”
In other words, there is no basis for concern that the National Tax Service, which is owned by a company or a tax representative, is taking follow-up measures such as a tax audit based on what it learned during the pre-examination process.
The research and manpower development expense tax credit review organization was operated in the form of a TF team at the headquarters of the National Tax Service this year, and next year, a team is set to be established as a formal organization at each regional office.
In the guideline for the application for’pre-examination for tax credits for research and human resources development expenses’ sent to companies by the National Tax Service earlier this month, it is stated that a non-face-to-face written examination is the principle.
However, it is expected that there will not be a lot of on-site checks as the local tax office, which will be established next year, will mainly be in charge of screening for SMEs.
An official from a local tax office told reporters, “We will go to the companies that have applied for pre-examination and see if the company meets the necessary requirements, such as technological innovation and development, in order to receive tax credits.”
A question arises whether the National Tax Service officials can judge the’innovation’ of a company that meets the requirements for tax credit for research and human resource development expenses.
Regarding this, the National Tax Service explained, “We have appointed five masters and doctors in science and engineering to the main office as employees, and for matters that are difficult to judge, we use the Technology Guarantee Fund to receive expert help.”
In an article in this journal on the 22nd, Lim also cited the SME R&D manager and explained that “there is no regulation on the requirements for the research center director as a result of the confirmation” about the regulation that the research institute should be from a four-year university in science and engineering.
“The tax credit preliminary screening system is not intended to make it difficult for companies to deduct the tax credit for research manpower development, but to guide and consult in advance so that companies subject to tax credit can meet the requirements.”
Regarding the criticism that it is perceived that it is a burden to companies that undergo preliminary examination by the National Tax Service, an official from a local tax office said, “All companies receiving tax credits for research personnel development expenses are not subject to the IRS examination, but the concept of consulting in advance only for the companies that have applied for it. Since it is a screening process, if you do not want to, you can report corporate tax as usual without applying for a review.”
In the case of applying for a pre-examination, public confidence is granted, such as exempting the underreported penalty tax, even if the tax is dispositioned differently from the result of the examination later.
This official repeatedly emphasized, “In the future, if the fact that the deduction was received even though it was not subject to a tax investigation, etc. is revealed, additional tax will be charged. Therefore, the preliminary examination of the concept of consulting was introduced in order to eliminate this controversy.”