Current Practices and Improvement Plan on Criminal Tax Investigation and Punishment System
Asian Tax Journal Vol. 14 No. 2 (2013), pp. 111-148
Abstract
This paper reviewed the current practices on criminal tax investigation and punishment system in Korea and compared with those of USA and Japan to find the implication on the improvement in Korea. This study examined the adequacy of criminal tax investigation and the effectiveness of its punishment. The findings are summarized as follows：First, Upper imprisonment limit(life sentence) and punishment with fine(2～5 times of tax evaded) should be lowered in a ‘Act on the Aggravated Punishment, etc. of Specific Crimes’. Also, new sentencing guidelines for tax criminals in conjunction with the ‘Tax Criminal Punishment Act’ should be classified in detail and applied to actual judgement to ensure the equitability of punishment. Second, to fulfill the taxpayers’ right to know, the National Tax Service should disclose sufficient information on the types criminal tax investigation, prosecution rate, and level of judicial punishment. Third, to remedy low prosecution rates, the number of specialist(attorneys) for legal department of Regional Tax Office should be increased or a permanent coordination body between tax authority and prosecutor’s office should be established. Fourth, tax criminal investigation, excluding tax bill offenses, should be centered at Regional Tax Offices instead of District Tax Offices to strengthen the specialty of tax criminal investigation. Lastly, diverse income reconstruction methods such as net worth method, expenditure method, bank deposits method should be adopted in addition to basic expense ratio method in Income Tax Law to support the reasonableness of income reconstruction. We expect this study to ensure the effectiveness of tax criminal punishment and to contribute to the efficiency of tax criminal administration.
Keywords
- tax fraud(evasion)
- criminal tax investigation
- criminal tax punishment
- income reconstruction