Frequently Asked Questions

First check the notice for the taxes, periods, grounds, and start date of the audit. Advance notice is required in principle (Framework Act on National Taxes art. 81-7), and postponement can be requested for legitimate business reasons. Then review your filings, books, and supporting documents for the covered periods to identify likely issues. Preparation before the audit begins shapes the entire process, so consult a professional as soon as the notice arrives.

Related areas: Tax Audit Defense · Corporate & Income Tax

Yes. Taxpayers have the right to assistance from an attorney, CPA, or tax accountant during an audit, including attendance and statements of opinion (Framework Act on National Taxes art. 81-5). Counsel monitors whether questions and document requests stay within scope and ensures written records match what was actually said — critical where the audit may convert into a criminal tax investigation. Discuss attendance and preparation once a schedule is set.

Related areas: Tax Audit Defense · Tax Criminal Defense

In principle an audit must stay within the taxes and periods stated in the advance notice; the scope may be expanded only on statutory grounds, such as specific evidence of evasion spanning other periods, with written notice of the reason and new scope (Framework Act on National Taxes art. 81-9). Document requests exceeding the scope are not uncommon, and whether to comply affects how the issues expand later — seek advice at that point, as it also shapes any subsequent appeal.

Related areas: Tax Audit Defense

Yes. A taxpayer who received advance notice may request postponement before the audit begins on grounds such as fire or other disaster, illness, or extended travel (Framework Act on National Taxes art. 81-7). The grounds must be substantiated and approval rests with the tax office, so requests aimed merely at buying time rarely succeed. Regardless, start reviewing books and records for the covered periods as soon as the notice arrives.

Related areas: Tax Audit Defense

Re-auditing the same tax items and periods is prohibited in principle (Framework Act on National Taxes art. 81-4), allowed only on statutory exceptions such as clear new evidence of evasion. Courts treat an assessment based on an unlawful duplicate audit as grounds for cancellation itself. Check which exception the notice invokes; if unclear, object during the audit and preserve the issue for appeal. Records of the earlier audit speed up that assessment.

Related areas: Tax Audit Defense · Tax Appeals

Within 30 days of receiving the notice (Framework Act on National Taxes art. 81-15). Pre-assessment review challenges the proposed assessment before the tax bill is issued; if accepted, the matter can end without formal appeals or litigation. The window is short, so organize the issues and evidence immediately — after 30 days, only post-assessment remedies remain. Confirm the receipt date first and decide promptly with counsel.

Related areas: Tax Audit Defense · Tax Appeals

An objection asks the assessing office itself to reconsider and is optional; a Tax Tribunal appeal is decided by an independent body and (or an alternative review) is a mandatory step before court litigation (Framework Act on National Taxes arts. 55, 56). The right route depends on the nature of the issues, how ready your evidence is, and whether facts are disputed. Each step has its own deadline, so seek advice early after receiving the assessment.

Related areas: Tax Appeals · Tax Litigation

Within 90 days from the day you became aware of the assessment — usually the day the tax bill was received (Framework Act on National Taxes art. 68). If an objection was filed first, 90 days run from notice of that decision. The deadline is strictly enforced; even one day late means dismissal without a merits review. Ninety days is not long for organizing facts, gathering evidence, and drafting, so fix the receipt date and start preparing at once.

Related areas: Tax Appeals · Tax Litigation

Filing an appeal does not suspend the duty to pay. Late-payment penalties keep accruing past the due date and enforced collection can proceed separately (deferral of seizure and sale is available under the National Tax Collection Act in some cases). In practice, taxpayers who can afford it often pay first, contest, and recover with refund interest if successful. Depending on the case, collection deferral may be available — set the payment strategy with counsel alongside the appeal.

Related areas: Tax Appeals · Tax Litigation

The statute directs a decision within 90 days of filing (Framework Act on National Taxes art. 80-2, applying art. 65), but in practice complex issues and caseload often push this to several months or more. During the process the Tribunal may request materials and hear oral statements from your representative. What you control is not the timeline but the completeness of the petition and evidence from the outset — narrow the issues at the filing stage.

Related areas: Tax Appeals

A lawsuit must be filed within 90 days of receiving notice of the Tribunal (or NTS review) decision (Framework Act on National Taxes art. 56(3)), and this deadline is strictly enforced. Litigation follows formal rules of evidence and argument, so the case must be re-designed from the Tribunal record. The rejection decision states why your arguments failed — it is the starting point for litigation strategy, so review it with counsel immediately.

Related areas: Tax Appeals · Tax Litigation

The facts supporting taxation must in principle be proven by the tax authority. Courts, however, shift the practical burden to the taxpayer where the relevant materials lie within the taxpayer’s control, and many issues — proving expenses, rebutting gift presumptions — effectively require the taxpayer’s substantiation. Outcomes turn less on abstract doctrine than on who presents books, contracts, and money flows more coherently. Start by assessing what your records can prove.

Related areas: Tax Litigation

Yes. A denial of a correction claim is itself an appealable disposition: within 90 days of the notice you may file a Tribunal appeal and then a lawsuit to cancel the denial (Framework Act on National Taxes arts. 45-2, 68). In denial cases the grounds and evidence in the original claim form the skeleton of the whole dispute, so also assess whether grounds can be added or reinforced at the appeal stage.

Related areas: Tax Appeals · Tax Litigation

Yes, through a correction claim. If you reported more tax than the law requires, you may claim a refund within five years of the statutory filing deadline, in principle (Framework Act on National Taxes art. 45-2). Typical grounds include calculation errors, missed exemptions or reductions, double taxation, and subsequent events such as a court ruling voiding a transaction. If the claim is denied, that denial itself must then be appealed — so build the evidence and legal grounds into the claim from the start.

Related areas: Tax Appeals

In some cases, yes. Penalties are not imposed where there is justifiable cause for the failure (Framework Act on National Taxes art. 48), and filing an amended or late return within certain periods earns graduated reductions. Courts read "justifiable cause" narrowly, so concrete proof — such as erroneous official guidance or unavoidable circumstances — is key. Penalties sometimes exceed the principal tax, so review each penalty item separately for what to contest and what to seek relief on.

Related areas: Tax Appeals · Corporate & Income Tax

It depends on whether you filed by the statutory deadline. An amended return corrects an underreported filing made on time; a late return is for when no filing was made at all (Framework Act on National Taxes arts. 45, 45-3). In both cases, earlier filing means larger penalty reductions, and relief may be limited once an audit notice arrives — timing matters. Review your filing history to determine the most favorable sequence before acting.

Late-payment penalties accrue continuously, and after a demand notice, enforced collection follows — seizure of bank accounts, wages, and real estate (see the National Tax Collection Act). Large arrears can bring exit bans, public disclosure of delinquents, and credit reporting. Relief exists: payment deferral or installments where lump-sum payment is genuinely difficult, and unlawful or excessive seizures can themselves be challenged. Options narrow the longer arrears continue, so organize the amounts and assets and plan a response early.

Related areas: Tax Litigation

File and pay within six months from the end of the month in which death occurred (Inheritance Tax and Gift Tax Act art. 67). Prepare an asset inventory (real estate, deposits, shares, insurance), records of pre-death asset disposals and withdrawals, proof of debts and funeral expenses, and family relation documents. Pre-death disposals and withdrawals are often added back to the estate unless their use is substantiated. If the estate is complex, valuation and division must also fit within six months — plan the full timeline early.

Related areas: Inheritance & Gift Tax

Yes. Transfers into a family member’s account are often presumed to be gifts, and it falls on the taxpayer to show otherwise — living expenses, a loan, or entrusted funds management (see Inheritance Tax and Gift Tax Act art. 45). A loan claim needs more than a written note: actual interest payments and repayment flows must back it up. Substantiating after an audit or source-of-funds inquiry begins is much harder, so document large transfers in advance, and if questions have already been raised, organize your evidence with counsel first.

Related areas: Tax Audit Defense · Inheritance & Gift Tax

The rule is market value as of the date of death or gift (Inheritance Tax and Gift Tax Act art. 60). Sale, appraisal, or expropriation prices within the statutory window can qualify as market value; supplementary methods such as official assessed prices apply only where market value is hard to establish. Because the recognized value drives the tax, valuation is the most contested part of filing — especially for unlisted shares and leased real estate. A valuation gap with the tax office is itself an appealable issue.

Related areas: Inheritance & Gift Tax

Where the real owner and the registered holder of shares differ, the holder is deemed to have received a gift unless the absence of tax-avoidance purpose is established (Inheritance Tax and Gift Tax Act art. 45-2). The nominee arrangement itself triggers taxation, so showing that no property actually changed hands is not enough — you must present a clear non-tax reason with supporting records. Old nominee arrangements often surface late with large assessments; organize the history and documents to identify what can be contested.

Related areas: Tax Appeals · Inheritance & Gift Tax

Inheriting a qualifying SME or mid-sized company long operated by the decedent can substantially reduce inheritance tax through the business succession deduction (Inheritance Tax and Gift Tax Act art. 18-2), but post-deduction management conditions — maintaining the business line, employment, and shareholding — apply for years, and violations trigger clawback with interest. Whether you can keep the conditions matters as much as whether you qualify; the timing and route (inheritance vs. gift special provisions) also change the outcome.

Related areas: Inheritance & Gift Tax · Corporate & Income Tax

Where the funds used to acquire real estate or shares are not explained by reported income, the difference is presumed to be a gift and you are asked to substantiate the source (Inheritance Tax and Gift Tax Act art. 45). Prepare a chronological reconstruction of the money flow — income, withdrawals, loans, lease deposits, proceeds of prior asset sales — linked account by account. Partial substantiation can leave the remainder taxed as a gift, so settle the scope and strategy before submitting a response.

Related areas: Tax Audit Defense · Inheritance & Gift Tax

A gift with assumed debt (a loan or lease deposit) splits into two taxes: gift tax for the recipient on the net value, and capital gains tax for the donor on the debt portion, which is treated as a sale (Income Tax Act art. 88). In family transactions the reality of the debt assumption is always scrutinized — who actually services interest and principal afterward matters. Whether a plain gift or a burdened gift is more favorable depends on the asset and debt mix; compare the tax outcomes before executing.

Related areas: Inheritance & Gift Tax

The exemption applies where one household holds one house in Korea for at least two years as of the sale date, plus a two-year residence requirement if the house was in an adjustment-targeted area when acquired (Income Tax Act art. 89); high-value homes are taxed on the excess. Disputes mostly arise over what counts as one household and one house — recognition of household separation, whether officetels or purchase rights count, and compliance with the temporary two-house grace period. Verify before contracting; if the exemption is denied, the determination itself can often be contested.

Often yes. The surcharge depends on whether the house was in an adjustment-targeted area at sale, the household’s house count, and whether exclusions apply — low-value houses outside the capital region, inherited houses, registered long-term rentals (Income Tax Act art. 104). House-count and household determinations are recurrent points of disagreement, and the surcharge also removes the long-term holding deduction, so the stakes are large. Check the stated basis and the timing of any temporary surcharge suspension, and decide within the 90-day window.

Related areas: Tax Appeals

Gains are computed on actual transaction prices in principle; without the original contract and payment records, fallback methods apply in order — comparable sales, appraisal, then converted acquisition value (Income Tax Act arts. 97, 114). The converted value can cut either way and carries constraints, including penalties in certain new-construction cases. Actual cost can sometimes still be proven through registry records, bank statements, and brokerage files, so compare the options against your documents before filing.

Where a company is found to have unduly reduced its tax through transactions with related parties, the tax office disregards the transaction and recomputes income at market price (Corporate Tax Act art. 52) — typical cases are low-price sales, high-price purchases, and free or low-interest loans. The dispute always turns on what the market price is and whether the transaction had economic rationality, so appraisal values and comparable transactions decide outcomes. Organize the transaction history and pricing basis first.

Related areas: Corporate & Income Tax

When omitted income or fictitious expenses are found and the money left the company without a clear recipient, it is deemed disposed to the representative as salary (Corporate Tax Act art. 67). This adds personal income tax for the CEO and a withholding obligation for the company on top of corporate tax. The defenses are proving the funds never left the company or identifying the actual recipient — money-flow records are decisive. A notice of change in income amount is itself independently appealable within the deadline.

Related areas: Tax Appeals · Corporate & Income Tax

Yes. Non-business loans from a company to its CEO or shareholders (provisional payments) generate deemed interest added to taxable income and restrict interest deductions (Corporate Tax Act arts. 28, 52). Conversely, funds taken without clear grounds are disposed as salary or dividends, creating personal tax issues and, at scale, potential embezzlement exposure. Loan agreements, interest payments, and repayment records are the baseline; if already flagged in an audit, the points of contest differ by disposition type.

Related areas: Corporate & Income Tax

Often yes. Input tax denials rest on distinct grounds — defective invoice entries, invoices inconsistent with the actual transaction, non-business expenses (VAT Act art. 39) — and each has court-recognized exceptions and methods of proof. Where the problem lies with the counterparty, deductions can be preserved by proving the substance of the transaction and your good faith without negligence. The stated ground determines what evidence to prepare, so review the notice with counsel.

Related areas: Tax Appeals

When a counterparty is identified as an invoice mill, buyers typically face input tax denial plus penalties, and sometimes a criminal tax investigation. Courts protect bona fide parties who neither knew of the counterparty’s disguise nor were negligent in not knowing. Contracts, shipping documents, inventory records, and payment flows showing the transaction was real are the core of that proof — secure them the moment you hear of an investigation or receive an inquiry. Early advice determines what can still be proven.

Related areas: Tax Criminal Defense

Zero-rating applies a 0% rate to foreign-exchange-earning transactions such as exports — no output VAT, but input VAT is fully creditable and refundable (VAT Act arts. 21 et seq.). Exemption removes designated transactions (necessities, medical care, education) from VAT entirely, so input VAT cannot be credited (art. 26). The two look similar but diverge completely on input tax, and failures to meet zero-rating documentation requirements often surface later as assessments. Mixed export/exempt structures warrant a review in advance.

Where prices between foreign related parties — parent and subsidiary, for example — differ from what independent enterprises would have charged (the arm’s length price), the tax office may recompute income on that basis (Adjustment of International Taxes Act). Royalties, management fees, and intermediary trade margins, where comparables are hard to find, are the usual battlegrounds, and transfer pricing documentation showing how the price was set is the first line of defense. Review it before the audit does.

Related areas: Corporate & Income Tax

Residents and domestic corporations whose aggregate foreign account balances exceed KRW 500 million at any month-end must report the accounts the following June (Adjustment of International Taxes Act art. 53). Non-reporting or under-reporting draws administrative fines as a percentage of the amount, and omissions above KRW 5 billion can bring criminal punishment and public disclosure. Late or amended reports can still reduce sanctions, so if an omission is a concern, plan a voluntary disclosure strategy first.

Offshore cases — foreign accounts, paper companies, concealed foreign income — often begin from data obtained through CRS automatic exchange and treaty-based information exchange. For improper conduct involving international transactions the assessment limitation period is substantially extended (Framework Act on National Taxes art. 26-2), reaching back over a decade, and conversion to criminal investigation is comparatively likely. Issues absent from ordinary audits — the provenance and accuracy of exchanged data, residency determinations — argue for specialist involvement from the outset.

Related areas: Tax Audit Defense

Residency under the Income Tax Act turns not on nationality but on having a domicile in Korea or a place of residence for 183 days or more (art. 1-2); residents are taxed on worldwide income. The whole pattern of life — where family and assets are, where occupational and economic activity centers — is evidence, and dual residency is resolved by treaty tie-breakers such as permanent home and center of vital interests. Because how the records are organized can change the conclusion, get advice from the documentation stage.

If the recipient is a Korean resident, gifts of overseas property are in principle subject to Korean gift tax. Conversely, where a non-resident receives overseas property from a resident, a special rule may tax the donor instead (Adjustment of International Taxes Act art. 35). Foreign gift tax already paid is credited against double taxation. Residency, situs, and timing can swing the outcome, so cross-border gifts warrant design before execution — and assessments warrant a review of whether those determinations can be contested.

Related areas: Inheritance & Gift Tax

A transfer pricing adjustment by one country can tax the same income twice. Remedies include the Mutual Agreement Procedure (MAP) under the applicable treaty, where the two tax authorities negotiate an adjustment, and corresponding adjustments to domestic tax (Adjustment of International Taxes Act). MAP runs separately from domestic appeals and can suspend collection while pending, but application deadlines and the choice of whether to run both tracks vary case by case — settle the combination of procedures first.

Related areas: Corporate & Income Tax

Acquiring shares in an unlisted company that pushes your combined related-party holding over 50% makes you an oligopolistic shareholder, deemed to have acquired the company’s real estate in proportion to your stake — triggering acquisition tax (Local Tax Act art. 7(5)) even though no property changed hands. The determination (scope of related parties, computation of the increase for existing oligopolistic shareholders) is frequently contestable. Review before the share deal if possible; if assessed, evaluate an appeal within the 90-day window.

The structure is similar but the governing statute and the assessing authority differ. Local taxes such as acquisition and property tax are appealed under the Framework Act on Local Taxes — an optional objection or a direct Tax Tribunal appeal, with the same 90-day deadline (arts. 89 et seq.). Practical differences include the local government as respondent, local reduction ordinances as issues, and distinct handling of taxes assessed alongside national taxes (e.g., local income tax). Where both are in play, the two timelines should be designed together.

Related areas: Tax Appeals

Acquisition tax surcharges apply by category — corporate real estate acquisitions in large cities, housing acquisitions by multi-house owners or corporations, luxury property (Local Tax Act arts. 13, 13-2). Application turns on factual determinations: the acquirer and purpose, house-count computation, exempted business types and grace periods — areas where assessments are frequently debatable, particularly where temporary second homes, inherited houses, or purchase rights complicate the count. Check the stated basis and decide on an appeal within 90 days.

Property tax is assessed on whoever owns the property as of June 1 each year, on a base derived from official assessed prices (Local Tax Act art. 114). A sharp increase may reflect not only price movement but classification errors, missed reductions, or a use category inconsistent with actual conditions. The official price is challenged through its own objection procedure, the tax assessment through the local tax appeal route — each with its own deadline. Start by comparing the bill against the published price data.

Yes. As with national taxes, if the reported and paid local tax exceeds what the law requires, a correction claim may be filed within five years of the statutory filing deadline (Framework Act on Local Taxes art. 50). Typical grounds include unused reductions for which you qualified, misapplied surcharge rates, and subsequent events such as contract rescission. A denied claim must itself be appealed, so build the legal grounds and evidence into the claim from the start.

Related areas: Tax Appeals

Tax evasion is a criminal offense. Evading tax through fraud or other improper means carries imprisonment or fines (Punishment of Tax Offenses Act art. 3), and where annual evaded tax exceeds statutory thresholds (KRW 0.5 or 1 billion), the Aggravated Punishment Act applies with substantially heavier penalties. The typical path runs from a tax audit converting into a criminal tax investigation, then referral and prosecution. The core disputes are whether "improper means" existed and how the evaded amount is computed — manage statements and document production with counsel from the earliest signs of conversion.

Related areas: Tax Audit Defense · Tax Criminal Defense

A regular audit is an administrative process to correct tax; a criminal tax investigation examines suspected offenses such as evasion and carries criminal-procedure features (Procedure for the Punishment of Tax Offenses Act) — court-warrant searches become possible, and the outcome can lead to a notified disposition or referral to prosecutors. Statements recorded in confirmations and Q&A documents during a regular audit frequently become evidence in the criminal track, so manage every statement with counsel from the first signs of conversion.

Related areas: Tax Audit Defense · Tax Criminal Defense

Issuing or receiving tax invoices without an actual supply of goods or services is itself a criminal offense (Punishment of Tax Offenses Act art. 10), even without resulting evasion. With a profit motive and aggregate supply values above the statutory threshold (KRW 3 billion), the Aggravated Punishment Act art. 8-2 applies with far heavier penalties. The central disputes are whether the transactions had substance and the extent of involvement. Consult before submitting materials or making statements.

Related areas: Tax Criminal Defense

Payment alone does not extinguish criminal liability. However, complying with a notified disposition (paying the fine-equivalent within the deadline) at the investigation stage can close the case without referral (Procedure for the Punishment of Tax Offenses Act art. 15), and after indictment, payment and amended returns weigh meaningfully in sentencing. When and how much to pay is intertwined with the strategy for contesting the scope of the charge — the wrong sequence can narrow your own defenses, so decide with counsel first.

Related areas: Tax Criminal Defense

At the latest, before a conversion to criminal investigation is mentioned or interrogations and written confirmations begin. Q&A records and materials produced during the audit become the skeleton of the later investigation and trial, and early statements are hard to correct afterward. Contesting the computed evasion amount also requires designing the tax appeal and the criminal defense together — the earlier both tracks are viewed jointly, the more options remain. If investigators contact you, consult before scheduling an appearance.

Related areas: Tax Audit Defense · Tax Criminal Defense

The roles differ. Tax accountants excel at filings, bookkeeping, and day-to-day audit handling; attorneys focus on contesting the legality of assessments and managing statements and evidence. Court litigation can only be conducted by an attorney (see Attorney-at-Law Act art. 3), and where a criminal tax investigation or referral is possible, a single statement can carry criminal consequences. In practice, your accountant and attorney work together sharing records and issues — start by confirming what combination your stage of the case requires.

Related areas: Tax Litigation · Tax Criminal Defense

Fees depend on the stage (pre-assessment review, Tax Tribunal appeal, court litigation), the complexity of the issues, and the amount in dispute. At the first consultation we assess the assessment and its issues, then provide a written, stage-by-stage scope and fee; any change in scope is discussed in advance. The structure of fees, including any performance-linked component, is explained precisely in consultation in light of the case type and applicable rules. Procedural costs also differ by stage, so plan fees alongside the overall timeline.

Related areas: Tax Appeals · Tax Litigation