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KOREAN TAXATION General_Korean Tax Authorities The Ministry of

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					   KOREAN TAXATION



General_Korean Tax Authorities

The Ministry of Finance and Economy (MOFE) formulates and directs national tax policies while
the National Tax Service (NTS) carries out tax administration. The Office of Tax and Customs at
the MOFE is responsible for the planning of tax policies and drafting of tax laws while the NTS
enforces tax assessment and collection.

A. Office of Tax and Customs

The Office of Tax and Customs plans and coordinates overall national tax and custom policy.
The office is headed by deputy Minister for Tax and Custom who is assisted by three Director-
Generals and ten Division Directors.

Its national tax part is composed of Tax Policy Division, Tax Expenditure Division, Income Tax
Division, Corporation Tax Division, Property Tax Division, Consumption Tax Division, and
International Tax Division. The responsibilities of each division are as follows:

         The Tax Policy Division is responsible for (a) planning tax policy in general, (b)
         estimating tax revenue and analyzing actual tax revenue, and (c) planning and drafting
         of the Basic Law for National Taxes and National Tax Collection Law.
         The Tax Expenditure Division is in charge of: (a) planning, drafting, and interpreting
         laws, the Special Tax Treatment Control Law, the Education Tax Law, and the Special
         Tax Law for Rural Development; (b) estimating and analyzing tax exemptions and
         reductions; and (c) doing research on internal tax systems.
         The Income Tax Division is in charge of planning, drafting and interpreting laws
         concerning individual income tax and other related internal taxes excluding the matters
         that concern the International Tax Division.
         The Corporation Tax Division is responsible for planning, drafting and interpreting
         laws concerning corporation tax and other related internal taxes other than the matters
         dealt with by the International Tax Division.
         The Property Tax Division is in charge of planning, drafting and interpreting laws and
         provisions of (a) the Income Tax Law concerning capital gains tax and those of the
         Corporation Tax Law concerning an additional tax on capital gains, and (b) inheritance
         & gift tax.
         The Consumption Tax Division is responsible for planning, drafting and interpreting
         laws concerning the value added tax, special excise tax, liquor tax, telephone tax,
         securities transaction tax, stamp tax and transportation tax.
         The International Tax Division is in charge of: (a) research, planning, drafting and
         interpreting tax treaties with foreign countries; (b) research, planning, drafting and
         interpreting laws concerning taxation on income of non-residents and foreign
         corporations; (c) promoting international cooperation in the tax area; and (d) research
         on foreign tax systems.


B. National Tax Service

The National Tax Service was established as an external organization of the Ministry of Finance
on March 3, 1996. It is mainly in charge of the assessment and collection of internal taxes.
Before the National Tax Administration was established, these activities were the responsibility
of the Tax Bureau of the Ministry of Finance.
The National Tax Service, which is headed by a Commissioner, is responsible for establishing
basic policies and plans for tax administration, and for directing, supervising and controlling the
Regional, the District and the Branch Tax Offices.

The National Tax Administration, as the national office, consist of a Planning and Management
Controller, a Data Management Controller, an Inspector, 6 bureaus, 2 affiliated organizations
which serve as field offices, 7 Regional Tax Offices, 136 District Tax Offices, and 10 Branch
Offices. Internal organization of the National Tax Service is as follows:

         The Assistant Commissioner for Planning and Management is responsible for
         policy formulation, planning, budgeting, and the management of tax administration in
         general.
         The Assistant Commissioner for Information System Management is in charge of
         the management and development of data using a computer system located in the
         main Electronic Data Processing System (EDPS) center in Seoul and the three
         regional EDPS branches.
         The Inspector is in charge of auditing and inspection.
         The Taxpayer Service Bureau is divided into four types of divisions: the Tax
         Collection Division, Taxpayers Advocate Division, Service Development Division,
         Public Relations Division. The Tax Collection Division covers revenue forecasting,
         control over the collection of national taxes, refunds of overpaid taxes, and the
         management of delinquent taxpayers. Taxpayers Advocate Division covers
         consultation concerning tax payment and handling the grievances related to tax and
         Taxpayers' right charter and Tax service charter, development of kind tax service,
         operation of public examination & prosecution, operation of internet web site. Service
         Development Division covers improvement of system in connection with activities civil
         petition and operation, improvement of tax declaration formula & tax payment
         procedure, and operation of tax consulting center. Public Relations Division covers
         setting of guidelines for tax payment and PR activities, tax education, exaltation public
         tax payment mind, and assisting civil movement of sincere tax payment
         The Legal Affairs & Appeals Bureau consists of two types of divisions : the Legal
         Affairs Division covers overall coordination of legislation and amendment of laws
         examining establishment and amendment of notification, order, ruling and national tax
         fundamental directives in advance. Tax Appeals Division ¥ ° ¥ ± , ¥ ² , covers handling the
         application for examination on the imposition of tax, handling the application for
         examination on capital gains tax imposed by the chief of the tax offices, operating the
         National Tax Examination Committee
         The Individual Taxation Bureau is comprised of Value Added Tax Division, Individual
         Income Tax Division, Property Tax Division. The Value Added Tax (VAT) Division is in
         charge of imposing and reducing VAT, establishing and enforcing the plan for settling
         the giving and receiving order of tax invoice, supporting and instructing the tax
         assistant organization of VAT, establishing and managing the standard reporting rates.
         Individual Income Tax Division is in charge of imposing, reducing and inspecting the
         income tax (excluding the portion of withholding and capital gains tax) and the asset
         revaluation tax on individual taxpayers, imposing the aggregate taxation for financial
         income, registering a taxpayer exempted from VAT and inspecting and confirming the
         amount of income, inspecting and adjusting a standard income ratio, managing and
         supervising tax agencies such as the certified public accountants and tax accountants.
         The Property Tax Division is in charge of planning and coordinating various measures
         for real property, collecting and managing the information related to the speculative
         investment in real property, imposing and reducing capital gains tax, imposing and
         reducing capital gains tax, excessive land tax, selecting the applicable and taxable
         area for excessive land tax and matters relating to the publication of rising ratio of
         ordinary land price, directing and coordinating administration mobilizing system for
         establishing the publicly notified land price system, imposing and reducing the
         inheritance tax and gift tax, certifying the proceeds of the sale of real property by the
         foreign-residents, establishing and managing the evaluation standard for the various
         value of properties such as the tangible property, securities and goodwill.
         The Corporate Taxation Bureau is composed of three divisions: Corporation Tax
         Division is in charge of imposing, reducing and inspecting the corporate income tax,
         income tax which is a portion of withholding, and the asset revaluation tax on corporate
         taxpayers, managing the tax registers of corporations, post managing the non-profit
         corporations. The Excise Tax Division is responsible for imposing and reducing the
         liquor tax, special consumption tax, securities transaction tax and stamp tax, managing
         the tax stamp and tax stamp bottle cap, directing and supervising the analysis and
         appraisal of taxable items of liquor tax and special consumption. International
         Operations Division is in charge of the Inspecting, imposing and reducing the income
         tax and corporation tax on foreigners, foreign corporations and foreign invested
         corporations, managing the source of tax for international transactions of the foreign
         investing corporations and domestic corporations, establishing and improving the
         system related to international taxation, collecting the withholding tax from non-
         residents, assisting the various international conferences, international organizations
         and foreign government authorities relating to the taxation, assisting the taxation
         policies for foreign investing corporations, collecting data related to the foreign taxation
         policies
         The Investigation Bureau is consisted of four divisions. Investigation Division I takes
         charge of the Establishing, inspecting and managing the investigation plan for internal
         tax crimes, collecting and analyzing tax examination data for corporations, answering
         the questions and managing the civil petitions related to tax crimes. Investigation
         Division ¥± is responsible for the collecting and managing the tax evasion information
         data, accepting and managing the information provided related to tax evasion,
         collecting and managing data related to unlawful tax sources such as speculation and
         private loan. Investigation Division ¥² is responsible for the Tracing and investigating
         the distribution channel of the goods assisting the price stability and corrupting the
         trading orders, inspecting the unit per Won and the yield rate of production for the
         important goods, developing a computer investigation method and improving the
         computer accounting management. Investigation Division ¥²           is responsible for the
         exchanging the taxation information data among the government authorities,
         examining and tax auditing the international transactions, managing data for foreign
         exchange sale and personal remittance.
         The General Affairs Division is an independent division under the Deputy
         Commissioner. This division is in charge of personnel administration, general affairs
         and accounting.

C. Regional Tax Office

A Regional Tax Office, under the supervision of the National Tax Service, is responsible for the
direct guidance and control over the activities of the District Tax Offices. In addition, a Regional
Tax Office directly handles the assessment of taxes on certain taxpayers in special cases. It
usually has two independent division and three types of bureaus: General Affairs Division;
Inspector Division; Taxpayers Service Bureau; Tax Return Management Bureau; Investigation
Bureaus I, II, III, IV.

The major responsible duties are similiar to those of the NTS except that the Tax Return
Management Bureau covers the duties of the Individual Taxation Bureau and the Corporate
Taxation Bureau of NTS. There are six Regional Tax Offices nationwide in Seoul, Chungbu,
Taejeon, Kwangju, Taegu and Pusan.

D. District Tax Office

The District Tax Office is the front-line organization responsible for the assessment, collection,
audit and investigation of all internal taxes. In general, a District Tax Office consist of a General
Affairs Division, and Income Tax Division, a Property Tax Division, a Corporation Tax Division,
and a Value Added Tax Division. However, the organization of individual District Tax Offices
varies according to their respective scale of the district they govern. Overall duty of each
division is similar to that of regional tax office.

E. National Tax Tribunal

The National Tax Tribunal was established as an independent organization under the former
Ministry of Finance on April 1, 1975. It is composed of a Chief Judge, 5 Judges, 10 Examiners
and a General Affairs Division. It is responsible for the examination and judgement of tax
appellate cases.




 This information is prepared for MAC&Partners to provide foreign users with the basic
 understanding of Korean accounting and tax issues. To solve specific accounting and tax matters,
 this information needs to be updated and reexamined by a specialized accounting and tax
 advisor. No warranty is given as to the correctness of the information it contains and no liability is
 accepted for any statement or opinion.


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 17-13, Yoido-dong, Youngdeungpo-ku,
 Seoul, 150-010, Korea

 Telephone +82. 2. 784. 4610
 Facsimile +82. 2. 784. 4611
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