PUNISHMENT OF TAX OFFENSES ACT
Wholly Amended by Act No. 9919, Jan. 1, 2010
Amended by Act No. 11210, Jan. 26, 2012
Act No. 11613, Jan. 1, 2013
Act No. 11873, jun. 7, 2013
Act No. 12172, Jan. 1, 2014
Act No. 13627, Dec. 29, 2015
Act No. 14049, Mar. 2, 2016
The purpose of this Act is to enhance the effectiveness of tax law and establish a healthy tax morale of the people by prescribing matters concerning punishments and administrative fines on those who violate tax law.
The term "taxes" in this Act means national taxes, excluding customs duties.
| (1) | A person who evades a tax, obtains a tax refund or deduction by fraud or other improper means shall be punished by imprisonment with labor for not more than two years or by a fine equivalent to not more than double the amount of tax evaded, refunded or deducted (hereinafter referred to as "amount of tax evaded, etc."): Provided, That in any of the following cases, he/she shall be punished by imprisonment with labor for not more than three years or by a fine equivalent to not more than three times the amount of tax evaded, etc.: |
| 1. | Where the amount of tax evaded, etc. is 300 million won or more and such amount of tax evaded, etc. is at least 30/100 of the tax amount to be reported and paid (referring to the tax amount which shall be determined and notified by the Government, in cases of taxes the Government imposes and collects according to a return of a person liable to taxation); |
| 2. | Where the amount of tax evaded, etc. is at least 500 million won. |
| (2) | A person who commits a crime referred to in paragraph (1) may be punished by imprisonment with labor in parallel with a fine depending upon the circumstances. |
| (3) | A person who commits a crime referred to in paragraph (1) makes a modified return on the amount of tax evaded, etc. within two years after the legal deadline for a return expires under Article 45 of the Framework Act on National Taxes or makes a return after the deadline within six months after the legal deadline for a return expires under Article 45-3 of the said Act, his/her punishment may be reduced. |
| (4) | A person who habitually commits a crime referred to in paragraph (1) shall be aggravated with 1/2 of the punishment. |
| (5) | The timing of consummation of offenses prescribed in paragraph (1) shall be in accordance with the following classifications: |
| 1. | Taxes the Government imposes and collects in accordance with a return of a person liable to taxation: When the payment deadline expires after the Government determines to investigate and determines the tax base of the relevant tax items: Provided, That where the Government is unable to determine to investigate and determine the tax base of the relevant tax items because a person liable to taxation does not report the tax base in accordance with tax law for the purpose of evasion of taxes, the time when the deadline for a report of the tax base of the relevant tax items expires; |
| 2. | Taxes which do not fall under subparagraph 1: When the deadline for such report and payment expires. |
| (6) | "Fraud or other improper means" in paragraph (1) means any of the following active acts which make the imposition and collection of taxes impossible or remarkably difficult: <Amended by Act No. 13627, Dec. 29, 2015> |
| 1. | A false book entry, such as double bookkeeping; |
| 2. | Preparation and receipt of false evidence or a false document; |
| 3. | Destruction of books and records; |
| 4. | Concealment of property, fabrication or concealment of income, earnings, acts, transactions; |
| 5. | Not preparing or keeping books intentionally, or fabrication of bills, tax invoices, a sum table of bills or a sum table of tax invoices; |
| 7. | Other acts by a deceptive scheme or improper acts. |
| Article 4 (Illegal Distribution of Tax-Free Petroleum) |
| (1) | A petroleum distributor who evades a tax, or obtains a tax refund or deduction by using or selling petroleum specified in Article 106-2 (1) 1 of the Restriction of Special Taxation Act (referring to a petroleum distributor under paragraph (2) of the same Article) for purposes other than those specified in the same subparagraph shall be punished by imprisonment with labor for not more than three years or by a fine not exceeding five times the amount of tax evaded, etc. |
| (2) | A person who sells tax-free petroleum acquired from a person who was supplied the tax-free petroleum referred to in paragraph (1) shall be punished by an administrative fine not exceeding three times the sale price. |
| (3) | A person who evades a tax by taking out petroleum exempted from individual consumption tax and traffic, energy and environment tax for use by overseas sailing vessels or deep-sea fishing vessels referred to in Article 18 (1) 11 of the Individual Consumption Tax Act and Article 15 (1) 3 of the Traffic, Energy and Environment Tax Act for purposes other than those for overseas sailing vessels or deep-sea fishing vessels, or obtains a tax refund or deduction on petroleum used for purposes other than those for overseas sailing vessels or deep-sea fishing vessels as if petroleum has been used for overseas sailing vessels or deep-sea fishing vessels, shall be punished by imprisonment with labor for not more than three years or by a fine not exceeding five times the amount of tax evaded, etc. |
| (4) | A person who sells petroleum taken out for purposes other than those for overseas sailing vessels or deep-sea fishing vessels under paragraph (3) or acquires petroleum knowing such fact shall be punished by an administrative fine not exceeding three times the sale price or the acquisition cost. |
| (5) | Administrative fines referred to in paragraphs (2) and (4) shall be imposed and collected by the head of the competent tax office. |
| Article 4-2 (Unlawful Issuance of Tax-Free Petroleum Purchase Card) |
[This Article Newly Inserted by Act No. 12172, Jan. 1, 2014]
| Article 5 (Manufacture or Sale of Counterfeit Petroleum Products) |
A person who evades a tax by manufacturing or selling counterfeit petroleum products defined in subparagraph 10 of Article 2 of the Petroleum and Petroleum Substitute Fuel Business Act shall be punished by imprisonment with labor for not more than five years or by a fine not exceeding five times the amount of tax evaded. <Amended by Act No. 11613, Jan. 1, 2013>
| Article 6 (Manufacture and Sale of Liquor without License) |
A person who manufactures (excluding manufacture for an individual consumption) or sells a liquor, crude liquor, and pre-liquor without obtaining a license under the Liquor Tax Act shall be punished by imprisonment with labor for not more than three years or by a fine not exceeding 30 million won (referring to the amount which is three times the amount equivalent to the relevant liquor tax, when the amount which is three times the amount equivalent to such liquor tax exceeds 30 million won). In such cases, crude liquor and pre-liquor shall be deemed Takju (unrefined rice wine).
| Article 7 (Evasion of Disposition on Default) |
| (1) | When a person liable to taxation or a person who occupies property of a person liable to taxation conceals or omits such property or makes a false contract for the purpose of evasion of or causing another person to evade the execution of disposition on default, he/she shall be punished by imprisonment with labor for not more than three years or by a fine not exceeding 30 million won. |
| (3) | A person who aids and abets acts referred to in paragraphs (1) and (2) or accepts a false contract while aware of the circumstances referred to in paragraphs (1) and (2) shall be punished by imprisonment with labor for not more than two years or by a fine not exceeding 20 million won. |
| Article 8 (Incineration or Destruction, etc. of Books) |
A person who incinerates, destroys or conceals books or documentary evidence (including books or documentary evidence prepared by making use of the data processing system under Article 85-3 (3) of the Framework Act on National Taxes) prescribed to be kept by tax law, within five years from the date when the legal deadline for return of the relevant national tax expires for the purpose of destruction of evidence for evasion of taxes shall be punished by imprisonment with labor not more than two years or by a fine not exceeding 20 million won.
| Article 9 (Interference with Sincere Return) |
| (1) | A person who makes a tax return on behalf of a person liable to taxation makes a false return on taxes of another person in order to help him/her evade the imposition or collection of taxes shall be punished by imprisonment with labor for not more than two years or by a fine not exceeding 20 million won. |
| (2) | A person who causes a person liable to taxation not to make a report of the tax base (including modification to the report; hereinafter referred to as "report") or to make a false report, or who instigates or incites a person liable to taxation not to collect or pay taxes shall be punished by imprisonment with labor for not more than one year or by a fine not exceeding ten million won. |
| Article 10 (Breach, etc. of Obligations to Issue Tax Invoices) |
| (1) | Where a person who should prepare and issue tax invoices (including electronic tax invoices; hereafter the same shall apply in this Article) or a person who should submit a sum table of tax invoices by sale to the Government under the Value-Added Tax Act falls under any of the following cases, he/she shall be punished by imprisonment with labor for not more than one year or by a fine equivalent to not more than double the amount of tax calculated by applying a tax rate of value-added tax to the supply prices: |
| 1. | Where he/she fails to issue tax invoices or issues tax invoices entered falsely; |
| 2. | Where he/she submits a sum table of tax invoices by sale entered falsely. |
| (2) | Where a person who should be issued tax invoices and a person who should submit a sum table of tax invoices by purchase to the Government under the Value-Added Tax Act perform any of the following acts in conspiracy, they shall be punished by imprisonment with labor for not more than one year or by a fine equivalent to not more than double the tax amount calculated by applying a tax rate of value-added tax to the purchase prices: |
| 1. | Where a person fails to issue tax invoices or issues tax invoices entered falsely; |
| 2. | Where a person submits a sum table of tax invoices by purchase entered falsely. |
| (3) | A person who performs any of the following acts without supplying or being supplied with goods or services shall be punished by imprisonment with labor for not more than three years or by a fine equivalent to not more than three times the amount of tax calculated by applying a tax rate of value-added tax to the supply prices entered in such tax invoices and bills, the supply prices entered in a sum table of tax invoices by sale, a sum table of tax invoices by purchase, or the sale prices entered in a sum table of tax invoices by sale or the purchase prices entered in a sum table of tax invoices by purchase: <Amended by Act No. 11210, Jan. 26, 2012> |
| 3. | Submitting a sum table of tax invoices by sale and by purchase under the Value-Added Tax Act to the Government after entering them falsely; |
| 4. | Submitting a sum table of tax invoices by sale and by purchase under the Income Tax Act and the Corporate Tax Act to the Government after entering them falsely. |
| (4) | A person who arranges or mediates acts referred to in paragraph (3) shall also be punished with the same penalties as paragraph (3). In such cases, when a tax accountant, a certified public accountant or an attorney-at-law who conducts taxation business by proxy arranges or mediates acts referred to in paragraph (3), he/she shall be aggravated with 1/2 of the relevant punishment, notwithstanding Article 22 (2) of the Certified Tax Accountant Act. |
| (5) | A person who commits a crime under paragraph (3) may be punished by imprisonment with labor in parallel with a fine depending upon the circumstances. |
| Article 11 (Lending of Name, etc.) |
| (1) | A person who registers his/her business by using another person’s name for the purpose of tax evasion or evasion of the compulsory execution or who conducts his/her business by using business license registered under another person’s name shall be punished by imprisonment with labor for not more than two years or by a fine not exceeding 20 million won. <Amended by Act No. 13627, Dec. 29, 2015> |
| (2) | A person who permits another person to register business by using his/her name for the purpose of tax evasion or evasion of the compulsory execution or who permits another person to conduct business by using business license registered under his/her name shall be punished by imprisonment with labor for not more than one year or by a fine not exceeding ten million won. <Amended by Act No. 13627, Dec. 29, 2015> |
| Article 12 (Illegal Use, etc. of Tax Payment Stamps) |
Any of the following persons shall be punished by imprisonment with labor for not more than two years or by a fine not exceeding 20 million won:
| 1. | A person who reuses tax payment stamps (hereafter referred to as "tax payment stamps" in this Article) referred to in Article 44 of the Liquor Tax Act or transfers the same to others without obtaining approval of the Government; |
| 2. | A person who forges or alters tax payment stamps; |
| 3. | A person who possesses or uses tax payment stamps forged or altered, or delivers the same to others; |
| Article 13 (Punishment of Persons Responsible for Withholding) |
| (1) | When a person responsible for withholding of taxes fails to collect such taxes without good cause, he/she shall be punished by a fine not exceeding ten million won. |
| (2) | When a person responsible for withholding of taxes fails to pay taxes collected without good cause, he/she shall be punished by imprisonment with labor for not more than two years or by a fine not exceeding 20 million won. |
| Article 14 (Issuance, etc. of Withholding Receipts of Earned Income Entered Falsely) |
| (1) | A person who performs any of the following acts without being supplied with labor shall be punished by imprisonment with labor for not more than two years or by a fine equivalent to not more than 20/100 of the total wages entered in such withholding receipt and the total amount paid entered in a statement of payment: |
| 1. | Issuing to another person a withholding receipt of earned income entered falsely; |
| 2. | Submitting a detailed statement of earned income entered falsely to a tax office. |
| (2) | A person who arranges or mediates acts referred to in paragraph (1) shall be also punished by the same penalties as paragraph (1). |
| Article 15 (Breach of Obligations to Issue Receipts for Cash Payments) |
| (2) | Where a person who has violated paragraph (1) by mistake or omission voluntarily files a report thereon with the competent tax office or voluntarily issues a receipt for cash payment within seven days after he/she was paid a sales price, the administrative fine for such violation may be reduced. <Newly Inserted by Act No. 14049, Mar. 2, 2016> |
| Article 16 (Receiving and Granting Money or other Valuables) |
| (1) | When a tax official defined in subparagraph 17 of Article 2 of the Framework Act on National Taxes (hereinafter referred to as "tax official") receives money or other valuables in connection with his/her duties, a disciplinary committee shall be requested to make a resolution of the imposition of disciplinary charges not exceeding five times the amount of such money or other valuables received, on him/her through disciplinary procedures under Article 82 of the State Public Officials Act. |
| (2) | Where a tax official subject to disciplinary action has received a criminal penalty or fulfilled his/her responsibility for compensation, etc. (including cases where he/she has been forfeited or charged in addition) pursuant to other Acts for receipt of money or other valuables before or after a resolution of the imposition of disciplinary charges under paragraph (1), he/she shall request a disciplinary committee to make a resolution of the imposition of disciplinary charges reduced or to reduce or exempt disciplinary charges. |
| (3) | Article 78 (4) of the State Public Officials Act shall apply mutatis mutandis to requests for resolution of the imposition of disciplinary charges referred to in paragraphs (1) and (2). In such cases, "request for resolution of disciplinary action" shall be construed as "request for resolution of the imposition of disciplinary charges". |
| (4) | When a person who has been subjected to disposition of the imposition of disciplinary charges pursuant to paragraph (1) fails to pay such disciplinary charges within the term for payment, a person who has the right to take disciplinary action may collect such disciplinary charges by referring to the practices of disposition on default of national taxes. |
| (5) | The head of the competent tax office or the head of the competent custom office shall impose an administrative fine at least double the amount equivalent to money or other valuables given but not exceeding five times such amount on a person who gave a tax official money or other valuables: Provided, That where he/she has received a criminal penalty by other Acts, such as the Criminal Act, he/she shall not be punished by an administrative fine, and where he/she has received a criminal penalty after he/she was punished by an administrative fine, the head of the competent tax office shall cancel the imposition of an administrative fine.<Amended by Act No. 11210, Jan. 26, 2012> |
| Article 17 (Imposition of Administrative Fines on Disobedience to Orders) |
The head of the competent tax office shall impose an administrative fine not exceeding 20 million won on any of the following persons: <Amended by Act No. 11873, Jun. 7, 2013; Act No. 12172, Jan. 1, 2014; Act No. 13627, Dec. 29, 2015>
| 1. | A person who disobeys any of the following orders: |
| 2. | A person who uses machinery or containers not approved, in violation of the Liquor Tax Act; |
| 3. | A person who possesses for the purpose of sale, or sells liquor with no tax payment certification tokens attached as prescribed in the Liquor Tax Act, liquors produced without a license of the Government or duty-free liquors; |
| 5. | A person who makes a false statement in respect to questions of a tax official under the provisions on the rights of question and investigation of tax laws, such as the Income Tax Act and the Corporate Tax Act, or refuses or avoids the execution of his/her duties. |
| Article 18 (Joint Penalty Provisions) |
If the representative of a juristic person (including an organization deemed a juristic person pursuant to Article 13 of the Framework Act on National Taxes; hereinafter the same shall apply), an agent, an employee or any other worker of a juristic person or individual commits an offense prescribed in this Act regarding business of such juristic person or individual, not only shall such offender be punished but such juristic person or individual shall be also punished by a fine referred to in the relevant provisions: Provided, That this shall not apply to cases where the juristic person or individual has not been negligent in giving due attention and supervision concerning the relevant duties to prevent such offense.
| Article 19 (Confiscation) |
The head of a regional tax office or the head of a tax office may confiscate any of the following goods which a manufacturer or a dealer possesses:
| 1. | Goods manufactured without obtaining a license under the Liquor Tax Act; |
| 2. | Machinery, appliances or containers used for manufacture of goods under subparagraph 1; |
| 3. | Goods without attestors of tax paid or certain marking certifying the fact of tax payment under the Liquor Tax Act. |
| Article 20 (Partial Exclusion from Application of the Criminal Act) |
Unless the Commissioner of the National Tax Service, the head of a regional tax office or the head of a tax office accuses, no public prosecutor shall institute a public prosecution on any offense under this Act.
| Article 22 (Period of Prescription of Public Prosecution) |
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 15 shall enter into force on April 1, 2010. Article 2 (Transitional Measures concerning Penalty Provisions)
The previous provisions shall apply to the penalty provisions on acts performed before this Act enters into force.
Article 3 (Transitional Measures concerning Prescription of Public Prosecution)
Notwithstanding the amended provisions of Article 22, the previous provisions shall apply to the prescription of a public prosecution of a crime committed before this Act enters into force. Article 4 Omitted.
Article 5 (Relation with other Acts and Subordinate Statutes)
Where the provisions of the previous Punishment of Tax Evaders Act have been cited by other Acts and subordinated statutes as at the time this Act enters into force, and the provisions corresponding thereto are in this Act, the relevant provisions of this Act shall be deemed cited in lieu of the previous provisions.
ADDENDA <Act No. 11210, Jan. 26, 2012>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicability to Receiving and Granting of Money and Other Valuables)
The amended provision of Article 16 (5) shall apply from the first granting of money and other valuables after this Act enters into force.
ADDENDUM <Act No. 11613, Jan. 1, 2013>
This Act shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 11873, Jun. 7, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force on July 1, 2013.
Articles 2 through 19 Deleted.
ADDENDA <Act No. 12172, Jan. 1, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2014.
Article 2 (Transitional Measures concerning Penalty Provisions)
The previous provisions shall govern the application of penalty provisions to violations committed before this Act enters into force.
Article 3 (Transitional Measures concerning Administrative Fines)
The previous provisions shall govern the application of provisions regarding administrative fines to violations committed before this Act enters into force.
ADDENDA <Act No. 13627, Dec. 29, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Transitional Measures concerning Prescription of Public Prosecution)
Notwithstanding the amended provisions of Article 22, the previous provisions shall apply to the prescription of a public prosecution against any crime committed before this Act enters into force.
ADDENDA <Act No. 14049, Mar. 2, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicability to Administrative Fines and Voluntary Report, etc.)
The amended provision of Article 15 (2) shall apply with the goods or service supplied on or after this Act enters into force.