South Korea National Tax Service administrative reforms

The South Korean National Tax Service (NTS) has initiated several administrative reforms aimed at centralizing revenue collection and improving taxpayer experiences.

Initially, the NTS announced plans to centralize the collection of non-tax revenues, which are currently distributed across 64 government departments and 4,500 agencies, into a single unified system. To address approximately 16.2 trillion won in non-tax revenue arrears, the agency planned to deploy a task force of roughly 10,000 personnel. The NTS also intended to establish a special task force to monitor offshore tax evasion and high-value delinquencies, while gradually integrating Artificial Intelligence into its administrative processes.

Following these centralization efforts, the NTS reported progress in reforming tax audit practices to reduce the burden on taxpayers. The agency successfully reduced the average duration of on-site tax audits from 52 days to 33 days. Reforms included minimizing on-site residency, allowing taxpayers to select the timing of periodic audits, and increasing the proactive disclosure of verification items and taxation types by industry to assist with business stability.

Expanding on these audit reforms, the NTS has introduced a new initiative to exempt small and medium-sized enterprises (SMEs) from regular corporate and income tax audits for the 2025 fiscal year. To qualify, businesses must submit either a job creation plan or an investment expansion plan. Under the job creation plan, companies must meet specific workforce increase targets, with additional incentives for hiring youth, seniors, or persons with disabilities. Alternatively, the investment expansion plan requires revenue-based growth targets ranging from 5% to 20% depending on the company's size and location. Companies that fail to fulfill these submitted plans may face audits in 2028.