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Overview

Legislation

What is the relevant legislation relating to tax administration and controversies? Other than legislation, are there other binding rules for taxpayers and the tax authority?

The Korean Constitution establishes that ‘types and rates of taxes shall be determined by law’, thus all taxes must be imposed according to statutes passed by the National Assembly. Fundamental laws containing the basic rules of Korean taxes are as follows:

  • the National Tax Basic Law (NTBL), which prescribes the general tax requirements, including a taxpayer’s rights and obligations;
  • the National Tax Collection Law (NTCL), which stipulates the requirements for the collection of taxes;
  • the Corporate Income Tax Law (CITL);
  • the Personal Income Tax Law (PITL);
  • the Value-Added Tax Law (VATL); and
  • the Local Tax Law (LTL) for rules prescribing tax liabilities for specific taxable items imposed by local governments.

Relevant presidential decrees and ministerial decrees for each law above also function as sources of law.

The Korean National Tax Service (NTS) and the Ministry of Economy and Finance (MOEF) may issue authoritative rulings with respect to interpretation of tax laws. Such authoritative rulings are not legally binding but often exert substantial influence.

The principle of stare decisis does not apply to court decisions, including Supreme Court decisions. However, court decisions, especially the Supreme Court decisions, are often relied upon as authoritative interpretations of tax laws.

Tax treaties are given equal standing to domestic statutes, thus the various tax treaties between Korea and other countries have the same effect as any other domestic tax laws. However, under Korean statutory interpretation norms, ‘specific laws’ take precedence over ‘general laws’; accordingly where domestic laws and treaty provisions conflict with respect to a tax issue, the treaty will take precedence.

Relevant authority

What is the relevant tax authority and how is it organised?

The MOEF is the ultimate governmental authority with respect to national tax policy and works closely with the National Assembly in the enactment and amendment of tax laws. Within the MOEF, the Office of Tax and Customs plans and coordinates the national policies on tax and customs. It is headed by the deputy minister for Tax and Customs and assisted by four director-generals and 16 division directors (12 for internal taxes, four for customs and duties).

The NTS, an independent agency under the MOEF, is mainly in charge of the administration of the tax laws. The NTS consists of eight bureaus and six regional tax offices in Seoul, Busan, Daegu, Daejeon, Gwangju and Suwon (Jungbu), as well as 117 district tax offices across the country. The bureaus set forth the administrative policies, liaise with counterparts in foreign tax administrations, issue rulings and such like. The regional and district tax offices conduct the tax audits.

Enforcement

Compliance with tax laws

How does the tax authority verify compliance with the tax laws and ensure timely payment of taxes? What is the typical procedure for the tax authority to review a tax return and how long does the review last?

Taxpayers generally have the primary responsibility for calculating the tax base and the amount of tax, filing a tax return based upon their calculation and paying the taxes due. The most common return filings include:

  • the annual corporate income tax return;
  • the annual personal income tax return; and
  • the quarterly VAT tax returns.

The NTS has the right to review the returns to confirm the correctness of the tax base and tax amounts. The reviews are conducted either through a desk audit, where the auditors review the return and related documents in the NTS offices, or field audits, where the auditors go on site to the taxpayer’s premises and conduct the audits for a set amount of time. Field audits generally last two to five months, depending on the size and complexity of the taxpayer’s business and transactions.

Types of taxpayer

Are different types of taxpayers subjected to different reporting requirements? Can they be subjected to different types of review?

The general reporting methods for individual taxpayers and business entities are similar. However, individual taxpayers and business entities may have different filing requirements and schedules. For instance, individual taxpayers who must file personal income tax returns must do so within the month of May of each year, while incorporated business entities must file corporate income tax returns within three months from the end of their fiscal year. Individuals are required to file personal income tax returns only if they have non-salary income such as dividend, interest or business income.

Although individuals operating an unincorporated business would generally report the business income in the personal income tax return, unincorporated businesses must be registered with the relevant tax office and obtain a tax registration number for VAT purposes. Business entities also must file VAT returns on a quarterly basis.

Once tax filings are submitted to the tax authorities, the relevant tax office with jurisdiction may conduct audits of the tax returns, either field audits or desk audits. The scope and duration of each audit may vary case by case, and thus no general statement could be made regarding the review time for certain types of taxpayers.

Requesting information

What types of information may the tax authority request from taxpayers? Can the tax authority interview the taxpayer or the taxpayer’s employees? If so, are there any restrictions?

Corporate taxpayers are required to prepare and maintain certain financial statements - for example, income statement and balance sheet - that form the basis of their tax returns. Tax authorities are authorised to examine or order the submission of the accounting books, documents and other data, when necessary to perform their duty. Given the broad language in the law (‘when necessary to perform his duty’), it is a general understanding that as long as an examination or submission of data is relevant to determine the amount of tax liability or to confirm the correctness of a tax return, then such an examination is allowed under the law. The tax authorities are also allowed to question:

  • the employees of the taxpayer; and
  • ‘those who have transacted with the taxpayer’ including, among others, third party consultants, counterparties to a transaction and financial institutions.

Tax authorities are subject to various limitations intended to protect taxpayers’ rights, including (but not limited to) the following:

  • the authorities must give the relevant taxpayer at least 15 days notice prior to the official commencement of an audit (absent exceptional circumstances);
  • the audit period must be shortened as much as possible;
  • audits of the same issue for the same taxable period are generally prohibited (absent exceptional circumstances); and
  • the tax audit should be limited to only that which is ‘necessary and minimally’ required.

Available agency action

What actions may the agencies take if the taxpayer does not provide the required information?

A taxpayer is required by law to comply with orders issued by the tax officer and the non-compliance with such an order could constitute a crime under the Tax Criminal Punishment Law (TCPL), and may result in a fine of up to 20 million won (approximately US$18,000) for non-compliance.

If the document submission request is made with respect to international transactions in an audit involving transfer pricing, the non-compliance with such a request may result in the non-admissibility of such documents as evidence in any following appeal procedures, including the Mutual Agreement Procedure. Also, a fine of up to 100 million won (approximately US$90,000) may be imposed.

Protecting commercial information

How may taxpayers protect commercial information, including business secrets or professional advice, from disclosure? Is the tax authority subject to any restrictions concerning what it can do with the information disclosed?

There is neither a specific statutory provision or Korean court precedent that provides for the attorney-client privilege with respect to tax matters. Accordingly, there is still an open debate in Korea whether the attorney-client privilege can be used to protect documents from tax auditors. The Korean Bar Association has expressed its opinion in 2005 that attorney-client confidential communication should not be disclosed to the tax authority. However, based on our recent experience, the tax officers are generally reluctant in excluding such attorney-client communication from their scope of tax audit.

The tax laws impose a duty of confidentiality and accordingly, tax authorities must keep confidential documents and information collected with respect to any taxpayer, except where specifically permitted by law for prescribed purposes.

In addition, internal NTS guidelines require that tax audits must be conducted in good faith in a manner that protects the rights of the taxpayer by not unreasonably infringing on the taxpayer’s property rights. Further, the internal guidelines also provide that the tax officer must handle temporary possession of books and documents submitted by the taxpayer within the limited scope as demanded by the audit, and in the event that any of the evidence proves to be irrelevant to the audit, the officer must immediately return any such evidence to the taxpayer.

Limitation period for reviews

What limitation period applies to the review of tax returns?

The general statute of limitations for the assessment of taxes is five years from the statutory due date of the tax return. The statute of limitations is extended in certain circumstances - for example, in the case of tax evasion, the statute of limitations is extended to 10 years.

Alternative dispute resolution

Describe any alternative dispute resolution (ADR) or settlement options available?

Korea has a robust advance pricing approval programme to settle transfer pricing issues prior to any tax audit or assessment. However, Korean tax laws do not provide for other ADR programmes and, within a tax audit, there are no formal settlement options.

The taxpayer, however, has the opportunity to contest a proposed assessment prior to the official tax assessment, and if a tax assessment is made, the taxpayer has several routes to appeal the assessment. These are described below.

Pre-Assessment Appeal

Tax Treaty

If the taxpayer, either a resident of Korea or resident of the treaty country, believes that the tax assessment proposed by the Korean tax auditors is not in accordance with the provisions of the relevant tax treaty to which Korea is a party, then the taxpayer may request assistance from the competent authorities under the Mutual Agreement Procedure to resolve the issue.

Domestic

At the end of an audit, the tax authority is required to send a Pre-Assessment Notice setting forth the basis for and amount of the proposed tax adjustment. Upon receiving this Pre-Assessment Notice, the taxpayer may request a Review of Adequacy of Tax Imposition (RATI) with the relevant Regional Tax Office or the NTS within 30 days from the date of receipt of the Notice. In the case of a criminal referral or a Notice of Fine Due to the Violation of TCPL, however, the taxpayer is not allowed to make a RATI request.

Post Assessment Appeals

Tax Treaty

The taxpayer may request assistance from the competent authority of either treaty country under the Mutual Agreement Procedure to resolve a treaty issue.

Domestic

The taxpayer may also contest a tax assessment under the domestic appeals route. The first step of the domestic appeal process is for the taxpayer to file an administrative appeal to one of the following institutions:

  • NTS;
  • the Tax Tribunal; or
  • the Board of Audit and Inspection.

If unsuccessful at this first administrative appeals stage, the taxpayer may file an appeal with the Administrative/ District Court. It should be noted that the tax authorities are bound by any decision of the NTS, Tax Tribunal or the Board of Audit and Inspection at the administrative appeal stage, and therefore, cannot appeal any adverse decision at this first level.

Either party to the litigation can appeal an Administrative/District Court’s decision to the relevant High Court. Decisions of the High Court may be appealed to the Supreme Court by either party.

Collecting overdue payments

How may the tax authority collect overdue tax payments following a tax review?

If a taxpayer should fail to pay the taxes in full by the deadline stipulated in the Notice for Tax Payment, the NTS will issue a Notice of the Demand for Payment (of Delinquent Taxes). If a taxpayer does not pay in full the amount of taxes owed and the additional dues resulting from the delinquency by the stipulated due date, the tax authority may proceed with the collection actions, including attachment of the taxpayer’s property. Taxpayer’s property subject to attachment would include movable and immovable assets, securities, receivables, intangible rights and so on.

Penalties

In what circumstances may the tax authority impose penalties?

If a taxpayer fails to file a tax return or pay taxes on time, the tax authority will impose the following penalties: a penalty of 20 per cent of unreported tax for failing to file a tax return; 10 per cent penalty for underreporting of the tax amount; 40 per cent penalty on the underreported tax as a result of fraud or other unlawful acts. In addition, the tax authorities will impose interest penalties at a rate of 10.95 per cent per annum to the amount of underpaid taxes, which is calculated up to the date of the issuance of the Notice for Tax Payment.

If the taxpayer fails to pay the full amount of taxes and penalties by the due date stipulated in the Notice for Tax Payment, tax authorities will impose additional penalties: (i) a flat 3 per cent penalty on all the delinquent tax (ie, additional taxes and underreporting and underpayment penalties) plus (ii) 1.2 per cent a month on the delinquent tax amount, up to 60 months, for a total of 75 per cent of the delinquent tax amount.

The TCPL, which imposes tax criminal liability, establishes that a taxpayer who evades tax or obtains a tax refund or deduction by fraud or other improper means will be punished by imprisonment with labour as well as paying a criminal fine.

How are penalties calculated?

The penalty taxes are generally calculated on the underreported or underpaid amount of tax.

Criminal penalties are calculated on multiples of the evaded tax amount (usually within one to five times the evaded tax amount).

What defences are available if penalties are imposed?

Although theoretically a penalty tax may not be imposed if a taxpayer has justifiable grounds for non-fulfilment of its tax obligations, in practice, it is very difficult, if not impossible, to get penalty abatement or waiver.

A taxpayer may contest the legitimacy of a criminal penalty directly to the administrative/district court.

Collecting interest

In what circumstances may the tax authority collect interest and how is it calculated?

A 10.95 per cent per annum interest penalty applies to the non-payment or underpayment of taxes, and is accrued up to the date of issuance of the Notice for Tax Payment.

Penalty on the delinquent payment of taxes, which begins to accrue from the day after the due date on the Notice for Tax Payment is calculated as (i) flat 3 per cent plus (ii) 1.2 per cent per month, up to 60 months, for a total of 75 per cent of the delinquent tax amount.

Criminal consequences

Are there criminal consequences that can arise as a result of a tax review? Are these different for different types of taxpayers?

The TCPL, which imposes criminal liability for tax-related matters, provides that a taxpayer who evades tax or obtains a tax refund or deduction by fraud or other improper means will be punished by imprisonment as well as paying a criminal fine. Specific laws also provide grounds for imposing heavy penalties in cases where the amount of tax evaded exceeds certain monetary thresholds.

Examples of tax-evading activities include:

  • making false book entries, such as double bookkeeping;
  • preparation and receipt of false evidence or a false document;
  • destruction of books and records;
  • concealment of property, fabrication or concealment of income, earnings, acts, transactions; and
  • intentional failure to prepare or maintain books, or fabrication of bills, tax invoices, a sum table of bills or a sum table of tax invoices and such like.

Criminal sanctions apply to both individual and business entity taxpayers. In addition, vicarious liability can also apply to both. For example, if a representative, an agent, an employee, or any other worker of a business entity commits an offence prescribed in the TCPL with respect to the business of such an entity, not only the actual offender can be punished, but also the business entity on whose behalf the offender was working may be subject to sanctions. However, vicarious liability provisions do not apply to cases where the business entity has not been negligent in paying due attention and supervision in preventing such an offence.

Enforcement record

What is the recent enforcement record of the authorities?

According to statistics published by the NTS, investigations have been conducted against 4,985 out of 5.48 million individual taxpayers and 5,445 out of 673,374 corporate taxpayers that filed final tax returns in 2016. In 2016, internal revenue of approximately 243 trillion won was collected, consisting of 70 trillion won of personal income tax, 52 trillion won of corporate income tax and 62 trillion won of VAT.

Third parties and other authorities

Cooperation with other authorities

Can a tax authority involve or investigate third parties as part of the authority’s review of a taxpayer’s returns?

In Korea, it is the prevailing view that a tax officer is allowed to question (i) an employee of a taxpayer and (ii) ‘those who have transacted with the taxpayer’ including, among others, third party consultant, transaction counterparty and financial institutions. Unlike some other jurisdictions, the Korean tax authority is not required to notify or provide the taxpayer with the list of the persons examined or contacted by the tax authority.

However, since the NTBL specifies that a tax officer must conduct tax audits within the minimum scope necessary to impose fair taxation, taxpayers or third parties may argue that a specific request exceeds the ‘minimum scope’ limitation. Privacy-related regulations in relevant laws, such as Personal Information Protection Law, Credit Information Protection Law, Real Name Financial Transactions and Confidentiality Law among others, may also provide legal grounds to challenge the tax authorities’ request for information.

Taxpayers as well as ‘those who have transacted with the taxpayer’ are all under a duty to comply with the orders issued by the tax officer, unless provided with legitimate grounds for rebuttal. Therefore, non-compliance without a legitimate reason could result in criminal sanctions under applicable law, which may result in fine of up to 20 million won (approximately US$18,000) for non-compliance.

Does the tax authority cooperate with other authorities within the country? Does the tax authority cooperate with the tax authorities in other countries?

A tax office with jurisdiction over a certain taxpayer may request aid on various matters to tax offices in other jurisdictions if cross jurisdictional investigation is needed. When necessary to assess and collect taxes in relation to an international transaction, or to adjust the arm’s length price for national taxes and dutiable values, the tax authority may request information or data to the head of the customs office, as prescribed by the Presidential Decree of ITCL.

The Submission and Management of Taxation Data Law provides legal grounds for the tax authority to cooperate with a variety of other authorities in Korea. Although the NTS is required to keep materials confidential, the law does provide specific exceptions where the NTS must provide taxpayer information to other government agencies.

The NTS also regularly receives information from other central government agencies, local government agencies, the Financial Supervisory Service and so on , which are required to submit taxation data prescribed in the law and presidential decree to the tax office on a quarterly basis.

In terms of cooperation with foreign tax authorities, Korea is a signatory to the OECD Convention on Mutual Administrative Assistance in Tax Matters. In addition, most of the bilateral tax treaties into which Korea has entered includes information exchange provisions.

Special procedures

Voluntary disclosure and amnesties

Do any special procedures apply in cases of financial or other hardship, for example when a taxpayer is bankrupt?

Generally, tax debts will not be discharged even if a taxpayer declares bankruptcy. Nevertheless, the tax authority may defer tax payments, agree to instalment payment agreements, or extend the payment deadline if:

  • a great loss has been inflicted on the taxpayer’s property due to theft or disasters;
  • a conspicuous loss has been inflicted on the taxpayer’s business;
  • the taxpayer’s business is in a serious crisis;
  • the taxpayer or his or her family members living together have to receive long-term medical treatment due to disease or serious injury; or
  • the taxpayer cannot pay for other valid reasons.

 

Are there any voluntary disclosure or amnesty programmes?

There are no amnesty programmes for voluntary disclosure. Although there is a limited penalty abatement for taxpayers that voluntarily disclose by filing corrected returns before notification by the relevant tax office, the time within which the corrections must be made for penalty abatement is extremely limited.

Rights of taxpayers

Rules protecting taxpayers

What rules are in place to protect taxpayers?

According to the NTBL, the Commissioner of the NTS has the duty to establish and make public the Taxpayers’ Bill of Rights Charter and tax officers must provide the Charter to a taxpayer before the start of a tax audit. Both the NTBL and the Taxpayers’ Bill of Right Charter presume that a taxpayer is acting in good faith and the return submitted by the taxpayer is true. The taxpayers’ charter limits the tax officer’s investigatory discretion only to those necessary to impose appropriate and fair taxation, accords the right to legal assistance, and bars the tax authorities from duplicative investigation.

In addition, the NTS must appoint an Assistant Commissioner for Taxpayer Advocacy to be responsible for protecting the rights of taxpayers, and the Commissioner must assign officials in charge of taxpayer advocacy services in each regional and district tax office. The NTS, regional tax offices and district tax offices must also have a specially-dedicated committee that will review taxpayer rights issues.

A taxpayer may request a protection of right (a complaint filed in cases where an unfair conduct of a tax officer violates or is expected to violate the taxpayer’s right before or during an audit) and/or a civil petition for grievance (a complaint filed where the tax officer’s unfair conduct already violated the taxpayer’s rights and the relevant audit has been conducted).

Requesting information

How can taxpayers obtain information from the tax authority? What information can taxpayers request?

If a taxpayer requests information (which is related to the tax liability of its own) necessary for the exercise of its right, the relevant tax office should provide the information promptly. A taxpayer may seek protection of his or her rights if the relevant tax office declines or withholds the requested information without justifiable reason.

Tax authority governance

Is the tax authority subject to non-judicial oversight?

The Committee on Taxpayer Rights and the Assistant Commissioner for Taxpayer Advocacy within the NTS provide oversight of the relevant tax authorities.

The NTS, as part of the MOEF, is also subject to annual review by the National Assembly. Furthermore, the NTS is also subject to inspections conducted by the Board of Audit and Inspection.

Court actions (describe trial court actions in this section)

Competent courts

Which courts have jurisdiction to hear tax disputes?

There are no specialised tax courts in Korea. If a taxpayer wants to contest a tax assessment by the NTS, or bring any other tax related suit against the NTS, it can initiate court proceedings in the jurisdiction in which the relevant tax office is located. The first level of court is the District Court. In Seoul only, the Administrative Court, which is a special court within the District Court system, oversees all disputes involving the government’s regulatory agencies, including the NTS. Accordingly, in Seoul, the Administrative Court will be the venue for litigating tax assessment issues against the NTS. In all other districts, the District Courts will have the initial jurisdiction over tax cases between the NTS and taxpayers.

The appellate High Courts and the Supreme Court also have jurisdiction over tax disputes.

Lodging a claim

How can tax disputes be brought before the courts?

Taxpayers have the right to file a lawsuit against any tax assessment. However, procedurally, taxpayers cannot litigate claims against the NTS in court without first going through the administrative appeal process. In other words, a taxpayer can only appeal in court a prior decision from one of the three administrative appeals forums: the NTS, the Tax Tribunal, and the Board of Audit and Inspection. If the NTS, Tax Tribunal or Board of Audit and Inspection rules against the taxpayer, the taxpayer may file a petition in the relevant administrative/district court within 90 days. The NTS, however, is bound by the decision of the administrative forums, and cannot appeal in court a taxpayer favourable ruling in the administrative appeals process.

There is no minimum amount required to bring a claim to the courts.

Combination of claims

Can tax claims affecting multiple tax returns or taxpayers be brought together?

Generally, tax claims affecting multiple years with respect to the same taxpayer and the same tax issues may be brought together. Cases involving different taxpayers can also be brought together if the tax claim relates to the same issue and involves the same transaction.

Pre-claim payments

Must the taxpayer pay the amounts in dispute into court before bringing a claim?

A taxpayer may, in theory, appeal a tax assessment without first paying the tax assessment. However, in most cases, because the cost of the interest (and other penalties) could be very significant if the taxpayer should ultimately lose the appeal, most taxpayers pay the taxes upfront before proceeding. Below are the potential costs associated with not first paying the assessed taxes, if the taxpayer should ultimately not prevail in eliminating the assessed taxes:

Non-payment (or partial payment) of the assessed tax

Under the NTCL, the tax authority is allowed to issue an attachment order on a taxpayer’s assets if the taxpayer does not pay the assessed taxes by the deadline set forth on the Notice for Tax Payment. Delayed payment penalty will accrue until the payment is made:

  • one-time 3 per cent penalty on the unpaid amount, if payment is not made by the due date; and
  • penalty of 1.2 per cent a month on the unpaid amount (14.4 per cent per annum) until the payment is made up to a maximum of 60 months (ie, maximum of 72 per cent).

Application for postponement of collection while MAP is pending

The taxpayer may apply for a postponement of collection of taxes while a MAP is pending. Whether or not to allow such postponement, however, is at the tax authority’s discretion. In almost all cases, the NTS will require the taxpayer to provide a guarantee or collateral.

Full Payment of Assessed Tax

The taxpayer may choose to make a full payment of the assessed tax by the designated deadline on the Notice for Tax Payment. If the taxpayer prevails in the appeal, there would be a tax refund with interest. The current tax refund interest rate is 1.6 per cent per annum.

Cost recovery

To what extent can the costs of a dispute be recovered?

At the time of filing, the legal fees associated with filing a claim must be paid by the taxpayer. The court usually awards to the winning party the costs that arose from the administrative matters of the case. Administrative costs can therefore be recovered by the taxpayer if the taxpayer is successful. However, the amount of recovery is limited to predetermined amounts, and recovery of all the costs will not be complete.

The NTS can also recover costs from the taxpayer. Although historically, the NTS did not pursue the taxpayer for costs, it has recently begun to do so.

Third-party funding

Are there any restrictions on or rules relating to third-party funding or insurance for the costs of a tax dispute, including bringing a tax claim to court?

No. There is no restriction on or rules relating to third-party funding or insurance for the costs of a tax dispute.

Court decision maker

Who is the decision maker in the court? Is a jury trial available to hear tax disputes?

Tax disputes are heard and decided by a panel of judges. The number of judges in a court depends on the level of jurisdiction. In both the district and high (appellate) court levels, tax disputes are heard by a panel of three judges (one presiding judge and two other judges). A panel of four justices decide Supreme Court cases. Jury trials are not available for tax disputes.

Time frames

What are the usual time frames for tax trials?

The courts have no time limits for their decisions. It is difficult to predict how quickly a decision will be rendered, but normally it takes one to two years for the administrative/district courts to render a decision, one year each for the high courts and the Supreme Court to render their respective decisions.

Disclosure requirements

What are the requirements concerning disclosure or a duty to present information for trial?

There is no discovery process in Korea. A taxpayer or the tax authority may submit any relevant information or document they believe would support their claim and has no duty to share information with the other party.

If a supporting document or evidence lies in the possession of the other party or a third party, the court can issue an order for submission to the relevant party possessing the evidence, either upon a petition of a party or ex officio.

Permitted evidence

What evidence is permitted in a tax trial?

As in all litigation concerning civil and administrative matters, testifiers, expert and documentary evidence are permitted in tax litigation. The court, if necessary, may investigate the evidence and render judgment even to facts not asserted by the party. Witnesses may also request to testify in court.

Taxpayers do not have a duty to testify in court but may provide testimony after the court’s approval. Examinations as to the facts known through special knowledge and experience are also permitted in a tax trial.

A Korean translation must be attached to documents written in a foreign language.

Permitted representation

Who can represent taxpayers in a tax trial? Who represents the tax authority?

As in all litigation concerning civil and administrative matters, taxpayers can represent themselves in tax litigation. Taxpayers can also be represented by qualified attorneys. Certified public accountants and tax accountants cannot represent taxpayers in tax trials. The NTS can be represented by government officers, who may or may not be lawyers, or engage third-party lawyers.

Publicity of proceedings

Are tax trial proceedings public?

Court proceedings in tax cases are generally open to the public.

Burden of proof

Who has the burden of proof in a tax trial?

Generally, the tax authority has the burden of proof in tax disputes. Therefore, the tax authority must prove the existence of the facts that form the basis of the tax assessment. In practice, however, a taxpayer or plaintiff cannot be successful in revoking a disposition without presenting detailed facts and evidence to support the allegation that the assessment is illegal. Further, it should be noted that there are certain exceptions to the general allocation of burden of proof.

Case management process

Describe the case management process for a tax trial.

There are limited provisions that set forth specific trial procedures in Korea. Generally, there is no formal discovery process. There are strict deadlines for when an appeal can be filed - for example, an appeal of an administrative decision by the NTS/Tax Tribunal/Board of Audit and Inspection must be filed with the relevant administrative/district court within 90 days of the decision. There is no recourse if such deadlines are not met. In the trial proceedings, however, the judges have broad discretion on the scheduling of brief submissions, trial dates and so on.

Appeal

Can a court decision be appealed? If so, on what basis?

The three-tier court system applies to tax disputes. Appeals from an administrative/district court are heard by high courts and appeals from the high courts are heard by the Supreme Court. The taxpayer may appeal to the high court within two weeks from the delivery of judgment where the district court has made wrongful interpretation of the applicable law or has made the judgment based on inappropriate fact finding. The unsuccessful party may appeal the high court decision in the Supreme Court within two weeks from the delivery of judgment only where the high court decision has made wrongful interpretation of the applicable law (appeals to the Supreme Court on the ground of false fact finding is not permitted). See question 31 for information on the estimated time frame for tax disputes.