For fair taxation

Apply universal rules to all taxpayers

A ranking tax official has stressed that Korea regards foreign-invested companies the same as domestic firms and treats them equally. His point is certainly to ease concerns about aggressive tax audits on some foreign firms or their business promotion agencies.

On Wednesday, Kim Moon-soo, deputy commissioner of the National Tax Service (NTS), promised to minimize regular tax audits on foreign businesses operating in Korea this year. He made the promise during a luncheon meeting with some 100 executives from foreign firms.

Such a meeting is rare in this country. And it came after a recent tax audit on the European Union Chamber of Commerce in Korea (EUCCK). This indicates that the NTS is trying to ease brewing tensions with foreign businesses over the audit.

The nation should not discriminate against multinational firms doing business here by way of taxation. Rather it would be better to provide favorable treatment to them to promote their investment in Korea.

However, we have to call into question Kim’s promise which could sound like precluding tax audits on foreign enterprises. Whenever necessary, the authorities can and should inspect all firms, whether local or foreign.

The real question is not whether the authorities should increase or decrease the number of tax audits. What really matters is how the NTS audits companies in a transparent and unbiased manner. Few can deny that the NTS has long abused its mandate to help the ruling elite retaliate against CEOs supporting opposition politicians.

When the late President Roh Moo-hyun left office in 2008, the NTS carried out extensive inspections of businesses, whose CEOs were his confidants. The tax authorities have often come under criticism for serving as the handmaiden of those in power.

More than anything else, the NTS should maintain its political neutrality and independence to be fair in its tax administration. It cannot gain public trust without freeing itself from political pressure and influence.

It is equally important for the NTS to break corrupt ties with businesses which try to pay less tax and escape audits. Many former and current NTS commissioners and other ranking officials have frequently been implicated in bribery scandals.

The main function of the NTS is to collect tax as a source of government revenue. The authorities must let all taxpayers pay their fair share. Thus, the service should make sure that both firms and individuals comply with their tax obligations.

It needs to step up monitoring of family-run conglomerates and rich people to prevent tax evasion. But this does not necessarily mean that the NTS can go easy on smaller businesses or foreign-invested firms. It should apply universal rules that can be acceptable to all taxpayers no matter who they are ― local or foreign, large or small, rich or poor.