Tax agency clamps down on value-added cheating

Home > Business > Economy

print dictionary print

Tax agency clamps down on value-added cheating

A construction company did not provide transaction evidence such as tax invoices when doing business with small companies, individuals and those exempt from value-added taxes.
That was because such small businesses hardly ever asked for the documents. That allowed the construction company to intentionally omit earnings to avoid value-added taxes.
This time, the situation is different.
The tax agency collected data through an outside institution and compared it against the value-added report filed by the construction company. The National Tax Service (NTS) was able to slap a 40.5 billion won ($37.4 million) value-added tax on the unreported revenue before the payment.
A manufacturer got an additional refund on value-added tax after receiving fabricated invoices from small and powerless business partners or individuals.
The tax agency already had received electronic tax invoices from the small businesses and compared the value-added tax report filed by the manufacturer. It ended up taking back 4.6 billion won.
The NTS has decided on a more aggressive preemptive step in collecting value-added taxes. This is a turnaround from past practices where the NTS investigated any irregularities on value-added tax reports made by companies and small businesses after paymentss were made.
The changes come at a time when the tax agency has been faced with a tax shortfall of roughly 10 trillion won that has continued for the past three years. Even this year, the government is expecting a shortfall. The NTS has been taking a more aggressive approach to finding every cent of taxes that are due.
The NTS said it has decided to make preemptive investigations using data including credit card payments and cash receipts to verify any omission of sales and purchases by 5.96 million companies and individuals.
It also will use data collected by online shopping malls like Gmarket and 11st, where many small businesses and shops are concentrated.
For those who have falsified their address from the address of the business on credit card receipts, the actual businesses will be provided with their earning reports by the NTS.
The purpose of the preemptive investigation is to lead taxpayers to make honest reports.
“We plan to continuously expand our collection of various data provided by other institutions so we can preemptively know the correct taxable amount of the business,” said an NTS official. “We will focus our support on encouraging honest reporting by providing information that will help lead honest filing of reports.”
The 5.96 million businesses and individuals have to file their value-added tax payment reports on earnings and purchases made between July and December to the NTS by Jan. 26.
Businesses that are under intense management stress including losses caused by natural disasters will be given a maximum postponement of nine months to file their tax payments.
Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now