Big reward on reporting tax dodging helps agency

By Yoon Ja-young

The owner of a health supplement provider used borrowed accounts of company executives and employees to underreport his income so as to dodge taxes.

With the money saved, he bought a luxurious apartment, imported cars, and a summer house under the name of his wife.

He also sent his child to study abroad and enjoyed numerous trips overseas with the money.

One of his employees, however, reported the tax evasion to the National Tax Service (NTS), and the owner was ordered to pay 6 billion won in back taxes and penalties after an investigation.

The employee, meanwhile, got 200 million won as a reward.

The NTS said that rewards for those reporting tax evasion are helping it collect more taxes.

Whistleblowers totaled 19,442 last year, more than double the 8,945 in 2010.

The government collected 1.5 trillion won from the tax evaders, three times the 477.9 billion won collected in 2010.

According to the tax agency, 336 people got rewards from the agency for reporting tax evasion.

The reward totaled 8.7 billion won, with the person who got the biggest sum given 310 million won.

The NTS has been lifting the reward ceiling continuously.

Previously, those reporting tax evasion could get up to 100 million won, but the tax agency raised the ceiling to 1 billion won in 2013.

It was raised to 2 billion won last year and again to 3 billion won from this year.

“After we have raised the reward, the reports of tax evasion are increasing from corporate insiders. It is helping us a lot as the reports are specific and credible,” an official at the NTS said.

“They also seem to be actively reporting as more people are interested in the issue of justice in taxation,” he added.

The NTS is also getting report on accounts under borrowed names.

Reports of such accounts also more than doubled from a year ago to 12,105. The tax agency levied a total of 243 billion won in taxes on these accounts.

Those reporting these accounts can get up to a 1 million won reward.

President Park Geun-hye vowed that she can bolster her social safety net policy without increasing taxes by creating new income sources from the underground economy, but tax evasion is still prevalent in the country, especially among the self-employed.

According to a report by the National Assembly Budget Office, the self-employed evaded 29.7 percent of comprehensive income tax in 2012, an average of 2 million won each. Tax evasion has become more serious among those with high incomes. The self-employed in the top 10 percent income bracket evaded 44.1 percent of their income tax, or an average of 9.4 million won per person.

The high-income self-employed are the main target of the NTS in tackling the underground economy. The NTS levied 507.1 billion won in additional taxes after a probe in 2013, which compares with 203 billion won in 2010.