Korea tax: New tax audit guidelines announced

The Korean National Tax Service announced a new tax audit plan on 24 September 2009 that sets out criteria for companies that will be selected for a tax audit:

- Large companies (i.e. those with sales revenue of KRW 500 billion or more) – Every four years. Previously, these companies were audited based on the results of an analysis of the company's compliance with its filing obligations or if the company had not been audited for a long time.
- Medium-size companies (i.e. those with sales revenue of KRW 5 billion or more) – Based on the results of an analysis of the company's compliance with its filing obligations. These companies previously were audited under the same conditions as large companies.
- Small companies (i.e. those with sales revenue of less than KRW 5 billion) – Based on the results of an analysis of the company's compliance with its filing obligations, as well as random selection.

According to the Plan, the following companies will be excluded as tax audit targets for FY 2009:
- A company that has submitted a Plan for Job Creation to the district tax office;
- A small or medium-size company that, during FY 2009, has received a subsidy for sustaining employment from the Ministry of Labor;
- A small or medium-size company that has won first prize for the cooperation of labor and management; and
- A small company that has met all of its tax compliance obligations and is not suspected of tax evasion (except for certain specified companies).

In addition, a company that operates a business identified as one of the 17 New Growth Engine Industries, such as LED, bio medicine, green finance, etc., will not be a tax audit target company for three years after the year in which it starts to generate taxable income.