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37 sale of real property may be incorporated into the standard tax rate scheme. Under the current system, higher than standard rates are applied on gains from the sale of certain immovable property. Te policy also seeks to adjust the existing high progressive rates of inheritance and gif tax. Under the medium- and long-term policy, the aggregate property tax will be shifed to a local tax to help fnance local autonomous bodies. Te value added tax (VAT) policy will call for expanding the taxable objects, thereby keeping the supply of currently exempt ser- vices (for example, fnancial, education and medical services, etc.) subject to VAT. Te taxable objects of the individual consump- tion tax will be adjusted and the environ- ment-friendly energy tax scheme will be re- formed. Te policy addresses the need to review the international taxation system to keep up with changes in global business practices, which includes the development of the digital econ- omy. Given the current international drive to tackle ofshore tax evasion, the medium- and long-term directions of international taxa- tion will focus on improving the schemes to prevent this problem. As a means of pursuing this goal, continuing eforts will be made to reinforce both the transfer pricing and thin capitalization systems, as well as the fling re- quirements for ofshore fnancial accounts. In addition, the policy will seek to expand infor- mation exchange agreements with tax haven countries. It will also respond to micro issues such as the improvement of tax incentive sys- tem for foreign direct investment, as well as the guidelines for determining residency for income tax purposes. nTs Take steps to improve the Protection of Taxpayers’ rights Te National Tax Service (NTS) has an- nounced a series of measures to improve the protection of taxpayers’ rights as of July 1, 2013. Tis protection of taxpayers’ rights was legislated in January 2010 to be addressed in the Basic National Tax Act. Onsite Audit Feedback from Taxpayers: NTS taxpayer rights consultants make feld visits to taxpayers who have recently been au- dited to get feedback so they can identify ar- eas where the audit process can be improved. Te audit feedback program applies to small- and medium-sized corporate taxpayers, in- dividual taxpayers and the taxpayers from whom the NTS has not received written feed- back, i.e. a Tax Audit Survey Questionnaire. Te NTS said the feedback program is an important tool that allows taxpayers to advise the NTS of inconveniences or difculties they experience during tax audits. Taxpayer’s Opinion before the Audit Ex- tension Request: When an auditor requests an extension of a proposed audit period for any reason prescribed in the tax law, the NTS will receive and examine an opinion via phone or fax from the taxpayer before the re- quest is accepted. Tis is to reduce the possi- bility of an unnecessarily burdensome audit for taxpayers. Expanded Scope of Pre-assessment Protest: Te scope in which taxpayers may submit pre-assessment protests is expanded to in- clude any tax notice worth 1 million KRW or more, compared with the previous ceiling of 3 million KRW. Korea, u.s., u.K., australia agree on offshore Tax information sharing Te National Tax Service (NTS) announced that Korea has agreed with the U.S., U.K. and Australia to share ofshore tax information and fght cross-border tax evasion. According to the NTS, discussions on the sharing of information are now under way afer Korea agreed with the three other coun- tries to give access to information that each has acquired on assets held in typical tax havens such as Singapore, the British Virgin Islands, the Cayman Islands and the Cook Is- lands, among others. Te agreement is the latest NTS step to gain access to global tax information in its drive to fght ofshore tax evasion. Back in August 2010, the organization concluded a simulta- neous criminal investigation program with the United States’ Internal Revenue Service (IRS), which stemmed from the creation of a Simultaneous Criminal Investigation Pro- gram (SCIP) between the two countries. Te NTS-IRS criminal investigation agreement is the frst that Korea has signed with any for- eign tax authority and enables the tax author- ities of both countries to enhance coopera- tion and share information relating to those who are suspected of or associated with tax fraud or fnancial crimes. Earlier in March 2009, the NTS joined the Joint International Tax Shelter Information Center (JITSIC) to efectively deter abusive cross-border tax evasion schemes by shar- ing information relating to aggressive tax planning. Te Washington-based JITSIC was formed in 2004 by the U.S., U.K., Canada and Australia to share expertise, best practices and experience in tax administration as a way to combat tax schemes. As of now, nine more countries have joined the JITSC, including Ja- pan, Korea, China, France and Germany. Samil PricewaterhouseCoopers is the Korean member frm of PricewaterhouseCoopers. (02) 3781-3131 http://www.pwc.com/kr/en