Board of Audit and Inspection Starts Special Inspection

On May 27, the Board of Audit and Inspection of Korea (BAI) got started on special inspection over tax authorities such as the National Tax Service (NTS) to check the propriety of levy of inheritance and the gift tax on wealthy people.

Through the preliminary inspection into inheritance and gift taxes on wealthy people, which was carried out from the beginning of April, BAI discovered the fact that there were omissions in reference to financial assets of some of people who were levied with more than three billion won in inheritance and gift taxes and that there was no proper assessment of their unlisted stocks, and it implemented a special inspection over the head office, Seoul district office, and the central district office of the NTS starting May 27.

An executive of BAI said on May 30, “A lot of tax evasions were found through analysis of computerized documents which came from the NTS, Financial Supervisory Service (FSS) and so on,” and he revealed, “In some cases, tax authorities’ negligence in reference to financial assets or incorrect assessment of unlisted stocks led to levying lower taxes.”

In the cases of some wealthy people, they were revealed to have avoided inheritance and gift taxes by transferring stocks and financial goods purchased from unlisted venture firms.

The object of the special inspection this time is wealthy people who were levied with more than three billion won in inheritance and gift taxes from 2001 to 2003, and the inspection focuses on examining the propriety of tax authorities’ supervision of the source of their taxation.

Also, the BAI will examine the taxation of unlawful taxpayers who show a high level of consumption without regular income, large income earners such as doctors and lawyers by profession, and businessmen engaged in real estate business or pleasure resort businesses. The special inspection of the BAI will continue to July 2.

Young-Hae Choi yhchoi65@donga.com