ENFORCEMENT DECREE OF THE PROCEDURE FOR THE PUNISHMENT OF TAX OFFENSES ACT

Article 1(Purpose) #

The purpose of this Decree is to prescribe matters mandated by the Procedure for the Punishment of Tax Offenses Act and matters necessary for its enforcement.

Article 2(Tax offense cases under jurisdiction of commissioner of regional tax office) #

(1) “Important cases determined by Presidential Decree” in proviso of Article 3 (1) of the Procedure for the Punishment of Tax Offenses Act (hereinafter referred to as the “Act”) means a case that falls under any of the following subparagraphs:

1. Tax offense cases investigated by the commissioner of a regional tax office;

2. Other cases over which the commissioner of a regional tax office determines that it is necessary to directly investigate, taking into consideration the type and scale of business operated by a person subject to tax offense investigation, the amount suspected of tax evasion, etc.

(2) Where the head of a regional tax office intends to conduct a tax offense investigation in accordance with paragraph (1) 2 regarding a tax offense case over which the head of a tax office has initiated a tax offense investigation, he or she shall notify the head of a tax office and a person subject to tax offense investigation.

Article 3(Composition of the tax offense investigation and deliberation committee) #

(1) The commissioner of a regional tax office shall serve as the chairperson of the tax offense investigation and deliberation committee (hereinafter referred to as "the committee") (hereinafter referred to as ”the chairperson") under Article 5 of the Act, and the following persons shall serve as its members: <Amended on Dec. 5, 2016>

1. Up to 6 people designated by the chairperson from among the public officials belonging to a regional tax office;

2. No more than 13 people who are commissioned by the chairperson from among those with extensive knowledge and experience in law, accounting, or taxation.

(2) The commissioned members of the committee shall serve the term of 2 years.

(3) The chairperson may dismiss a commissioned member serving the term of office, if it is deemed that the member is unable to perform his or her duties due to grounds such as being sentenced to imprisonment without labor or a more severe punishment.

Article 4(Operation of committee) #

(1) The chairperson shall convene and preside over meetings of the committee.

(2) In cases where the chairperson is unable to perform his or her duties due to unavoidable reasons, a member designated in advance by the chairperson among the members referred to in Article 3 (1) 1 shall perform the duties on his or her behalf.

(3) The committee meeting shall be composed of the chairperson and 6 members designated by the chairperson for each meeting, but shall include at least 4 members referred to in Article 3 (1) 2. <Amended on Feb. 28, 2023>

(4) Notwithstanding paragraph (3), the following matters concerning tax offense cases other than the tax offense cases referred to in Article 3 of the Punishment of Tax Offenses Act shall be composed of 3 members designated by the chairperson for each meeting; in such cases, the presiding member of the committee shall be a member designated by the chairperson:

1. Extension of the tax offense investigation period and the expansion of the investigation scope;

2. Application of joint penalty provisions under Article 18 of the Punishment of Tax Offenses Act.

(5) Where the chairperson intends to convene a meeting, he or she shall notify the members designated under paragraphs (3) and (4) of the date, time, venue, and agenda of the meeting by not later than 5 days before the meeting is held; provided, if it is urgently required or there is an unavoidable reason, it may be notified by the day immediately before the meeting date.

(6) A majority of the members of the committee shall constitute a quorum, and any resolution thereof shall require the concurring vote of a majority of those present.

(7) Committee meetings shall not be open to the public; provided, they may be open to the public if the chairperson deems it necessary.

(8) Except as provided in paragraphs (1) through (7), matters necessary for the operation of the committee shall be determined by the Commissioner of the National Tax Service.

Article 5(Exclusion and recusal of members) #

(1) A member of the committee who falls under any of the following subparagraphs shall be excluded from deliberation and resolution on the tax offense cases:

1. Where the member, or his or her spouse or former spouse, is a party to the case that constitutes the factual basis of the relevant matter, or has a joint right or joint obligation in relation to such case;

2. Where the member is or was a relative of a party to the case that constitutes the factual basis of the relevant matter;

3. Where the member has given testimony or an expert opinion in relation to the case that constitutes the factual basis of the relevant matter;

4. Where the member is or has been engaged as a legal representative of a party in a matter that constitutes the factual basis of the case.

(2) A member who falls under any subparagraph of paragraph (1) may voluntarily recuse himself or herself from deliberation and resolution on the tax offense case.

Article 6(Selection of persons subject to tax offense investigation) #

(1) In Article 7 (1) 2 of the Act, “where an annual amount suspected of tax evasion is equal to or greater than the amount prescribed by Presidential Decree” refers to any of the following cases:

1. Where the annual amount of suspected tax evasion or the annual suspected tax evasion ratio is equal to or greater than the threshold specified in the following table according to the respective categories:

┌──────────────┬───────┬───────┐

│Annual reported income amount │Annual tax evasion │Annual tax evasion │

│ │Suspicion amount │Suspicion ratio │

├──────────────┼───────┼───────┤

│A. 10 billion won or more │2 billion won or more │15% or more │

├──────────────┼───────┼───────┤

│B. KRW 5 billion or more but less than KRW 10 billion│KRW 1.5 billion or more│20% or more│

├──────────────┼───────┼───────┤

│B. KRW 2 billion or more but less than KRW 5 billion │ KRW 1 billion or more │ 25% or more │

├──────────────┼───────┼───────┤

│A. Less than 2 billion won │500 million won or more │ │

└──────────────┴───────┴───────┘

2. Where the estimated amount of tax evasion is 500 million won or more per year.

(2) When applying paragraph (1) 1, the annual reported income amount shall be deemed to be less than 2 billion won in any of the following cases: <Amended on Jun. 28, 2013>

1. In case of failure to submit a tax base return under subparagraph 15 of Article 2 of the Framework Act on National Taxes (excluding cases where the payment obligation is exempted under Article 69 of the Value Added Tax Act);

2. In case of failure to register in accordance with Article 8 of the Value-Added Tax Act or Article 168 of the Income Tax Act.

(3) The amount of reported revenue under paragraph (1) shall be the amount reported within the statutory deadline for return as specified in the relevant tax laws (referring to the filing of a tax base return under subparagraph 15 of Article 2 of the Framework Act on National Taxes), or the amount of revenue reported after the statutory deadline specified in Article 45-3 of the Framework Act on National Taxes.

Article 7(Participants in seizure or search) #

“Person prescribed by Presidential Decree” in the latter part of Article 8 of the Act means a person who falls under any of the following subparagraphs:

1. A tax offense suspect;

2. The owner or holder of articles related to a tax offense;

3. A lawyer, tax accountant, or certified public accountant registered in accordance with Article 20-2 (1) of the Certified Tax Accountant Act, who is the agent of a person suspected of tax offense;

4. An adult capable of discernment, who is a cohabitant, servant, or any other employee of a person specified in subparagraphs 1 and 2 (applicable only if a person specified in subparagraphs 1 through 3 is unable to participate or refuses to do so);

5. A public official of the competent Si/Gun/Gu or a police officer (applicable only when a person falling under subparagraphs 1 through 4 is unable or refuses to participate).

Article 8(Seizure and search without warrant) #

“Person prescribed by Presidential Decree” in the proviso, with the exception of the subparagraphs, of Article 9 (1) of the Act means a person specified in subparagraphs 2 through 4 of Article 7.

Article 9(Public auction of seized articles) #

Where the commissioner of a regional tax office or the head of a tax office conducts a public auction of seized articles in accordance with Article 132 of the Criminal Procedure Act, he or she shall publicly announce the name and quantity of such articles, grounds for the public auction, place and date of the public auction, and other necessary matters.

Article 10(Prohibition on purchase of seized articles by tax officials) #

Tax officials may not directly or indirectly purchase seized, confiscated, or forfeited articles.

Article 11(Submission of opinions by persons subject to disposition of tax offenses) #

A person who intends to submit an opinion to the committee under Article 14 (3) of the Act shall do so in writing.

Article 12(Notification disposition) #

(1) In the case where the head of a regional tax office or the head of a tax office issues notification disposition in accordance with Article 15 (1) of the Act, he or she shall prepare a written notification and notify the tax offender and each corporation or individual under Article 18 of the Punishment of Tax Offenses Act, within 10 days from the date of completion of the tax offense investigation (in the case of a tax offense case that has been deliberated by the committee, the date of the committee’s resolution).

(2) The standards for imposing administrative fines under Article 15 (4) of the Act are as specified in Appendix.

Article 13(Preparation and service of documents) #

A tax official shall prepare documents in accordance with the Criminal Procedure Act and deliver them in person or by registered mail.