‘Model’ taxpayers paid out W363B in penalties

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‘Model’ taxpayers paid out W363B in penalties

Immorality has been running high even among those considered “model” taxpayers.

In the five years since 2009, the National Tax Service (NTS) has investigated 105 cases of “model” taxpayers and levied more than 363.1 billion won ($294.5 million) as penalties against them.

A report, provided by the NTS and delivered to a lawmaker of the opposition Minjoo Party of Korea, shows that during the same period of time, a total of 2,760 people were named “model” taxpayers.

Under the current system, model taxpayers are exempt from tax audits for three years. Among other benefits, they have access to exclusive immigration booths both for departure and arrival at airports here in Korea, special interest at financial companies and free parking in public spaces.

The year 2010 saw the most investigations on possible tax evasion by model taxpayers and the largest amount of penalty taxes. A total of 28 cases were investigated, while the tax agency slapped more than 106.9 billion won in fines on violators.

Model taxpayers are individuals or companies that have paid their taxes within the given deadline in the last five years. An individual also has to have income tax of more than 3 million won, while for small private entrepreneurs, their income tax needs to exceed 7 million won. For companies, the corporate tax has to be larger than 30 million won. Additionally, businesses and small enterprises need to be in operation for more than five years to qualify.

The names of model taxpayers are announced on March 3, the country’s tax day. In January, the tax agency announced the names of 626 model taxpayer candidates, which included Samsung SDS. The finalists will be cut down to around 520 after evaluation.

“Model taxpayers taking advantage of the current system to commit tax evasion during the period when they are not audited is immoral,” said Oh Jae-sae, the Minjoo Party lawmaker. “There is a need to create an environment for honest tax payment.”

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]

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