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
Act No. 16108, Dec. 31, 2018
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 on those who violate tax law. <Amended by Act No. 16108, Dec. 31, 2018>
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 or 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 and a fine concurrently in consideration of the related extenuating 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 or 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 evades a tax by taking out petroleum exempted from individual consumption tax and traffic, energy and environment tax for use for overseas sailing vessels or deep-sea fishing vessels pursuant to Article 18 (1) 11 of the Individual Consumption Tax Act and Article 15 (1) 3 of the Traffic, Energy and Environment Tax Act for any other purpose than use for overseas sailing vessels or deep-sea fishing vessels, or receives a tax refund on or deduction for petroleum used for any other purpose than use 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 the tax evaded, etc. <Amended by Act No. 16108, Dec. 31, 2018> |
| 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 or 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 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 after the elapse of the statutory due date of return of the relevant national tax, 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 or 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 10 million won. |
| Article 10 (Breach of Obligations to Issue Tax Invoices) |
| (1) | A person who performs any of the following acts 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: <Amended by Act No. 16108, Dec. 31, 2018> |
| 1. | Where a person who should issue tax invoices (including electronic tax invoices; hereafter the same shall apply in this Article) pursuant to the Value-Added Tax Act fails to issue tax invoices or issues tax invoices entered falsely; |
| 2. | Where a person who should issue invoices (including electronic invoices; hereafter the same shall apply in this Article) pursuant to the Income Tax Act or Corporate Tax Act fails to issue invoices or issues invoices entered falsely; |
| 3. | Where a person who should submit a sum table of tax invoices by sale pursuant to the Value-Added Tax Act submits a sum table of tax invoices by sale entered falsely; |
| 4. | Where a person who should submit a sum table of invoices by sale pursuant to the Income Tax Act or Corporate Tax Act submits a sum table of invoices by sale entered falsely. |
| (2) | A person who performs any of the following acts 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: <Amended by Act No. 16108, Dec. 31, 2018> |
| 1. | Where a person who should receive tax invoices pursuant to the Value-Added Tax Act fails to receive tax invoices or receives tax invoices entered falsely in conspiracy; |
| 2. | Where a person who should receive invoices pursuant to the Income Tax Act or Corporate Tax Act fails to receive invoices or receives invoices entered falsely in conspiracy; |
| 3. | Where a person who should submit a sum table of tax invoices by sale pursuant to the Value-Added Tax Act submits a sum table of tax invoices by sale entered falsely in conspiracy; |
| 4. | Where a person who should submit a sum table of invoices by sale pursuant to the Income Tax Act or Corporate Tax Act submits a sum table of invoices by sale entered falsely in conspiracy. |
| (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: <Amended by Act No. 11210, Jan. 26, 2012; Act No. 16108, Dec. 31, 2018> |
| 3. | Submitting a sum table of tax invoices by sale and by purchase under the Value-Added Tax Act entered 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 provides tax agent services arranges or mediates acts referred to in paragraph (3), he or 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) |
| (1) | A person who registers his or her business by using another person’s name for the purpose of tax evasion or evasion of the compulsory execution or who conducts his or 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 or 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 or her name shall be punished by imprisonment with labor for not more than one year or by a fine not exceeding 10 million won. <Amended by Act No. 13627, Dec. 29, 2015> |
| Article 12 (Illegal Use 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: <Amended by Act No. 16108, Dec. 31, 2018>
| 1. | A person who reuses tax payment certification token (hereafter referred to as "tax payment certification token" 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 certification token; |
| 3. | A person who possesses or uses tax payment certification token 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 or she shall be punished by a fine not exceeding 10 million won. |
| (2) | When a person responsible for withholding of taxes fails to pay taxes collected without good cause, he or 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 of Withholding Receipts of Earned Income Entered Falsely) |
| (1) | A person who performs any of the following acts without being supplied with labor to allow another person to falsely apply for labor encouragement subsidies (referring to the labor encouragement subsidies under Section 10-2 of Chapter II of the Restriction of Special Taxation Act) 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: <Amended by Act No. 16108, Dec. 31, 2018> |
| 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 Keep Confidentiality of Information on Overseas Financial Accounts) |
| (2) | Imprisonment with labor and a fine may be imposed concurrently on a person who commits a crime under paragraph (1) in consideration of the related extenuating circumstances. |
[This Article Wholly Amended by Act No. 16108, Dec. 31, 2018]
| Article 16 (Breach of Obligations to Report on Overseas Financial Accounts) |
| (1) | Where the amount a person obliged to report on information on overseas financial accounts pursuant to Article 34 (1) of the Adjustment of International Taxes Act fails to report by the deadline for report or the amount such person underreports (hereafter referred to as “amount of breach of obligation to report” in this paragraph) exceeds five billion won, the relevant person shall be punished by imprisonment with labor for not more than two years or by a fine equivalent to the amount between 13/100 and 20/100 of the amount of breach of obligation to report: Provided, That the same shall not apply where there is good cause. |
| (2) | A person who commits a crime referred to in paragraph (1) may be punished by imprisonment with labor and a fine concurrently in consideration of the related extenuating circumstances. |
[This Article Wholly Amended by Act No. 16108, Dec. 31, 2018]
| Article 17 Deleted. <by Act No. 16108, Dec. 31, 2018> |
| 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 (excluding violation of Article 36 of the Adjustment of International Taxes Act), 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. <Amended by Act No. 16108, Dec. 31, 2018>
| Article 19 Deleted. <by Act No. 16108, Dec. 31, 2018> |
| 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) |
The prescription of a public prosecution of any offense prescribed in Articles 3 through 14 shall expire when seven years lapse: Provided, That where an offender under Article 18 is governed by Article 8 of the Act on the Aggravated Punishment of Specific Crimes, the prescription of a public prosecution on a juristic person under Article 18 shall expire when 10 years lapse. <Amended by Act No. 13627, Dec. 29, 2015>
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 Statutes or Regulations)
Where the provisions of the previous Punishment of Tax Evaders Act have been cited by other statutes or regulations 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)
The amended provision of Article 15 (2) shall apply with the goods or services supplied on or after this Act enters into force.
ADDENDA <Act No. 16108, Dec. 31, 2018>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2019.
Article 2 (Transitional Measures concerning Administrative Fines and Confiscation)
The previous provisions shall apply where provisions concerning administrative fines, disciplinary surcharges, or confiscation are to be applied to acts conducted before this Act enters into force.
Article 3 Omitted.
Article 4 (Relationship to Other Statutes or Regulations)
Where other statutes or regulations cite the provisions of the former Punishment of Tax Offenses Act, if this Act has provisions corresponding thereto, the relevant provisions of this Act shall be deemed cited in lieu of the previous provisions.