Customs Audit, Investigation & Litigation
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Overview
A customs audit conceptually corresponds to a tax audit of internal taxes. However, the scope of items subject to review in a customs audit is far wider than a tax audit, because a customs audit includes review of the appropriateness in the overall satisfaction of relevant import/export requirements, such as customs valuation, origin, HS classification, import/export clearance requirements, and foreign exchange. In addition, based on the results of such customs audit, administrative litigation (customs imposition, correctional measures, etc.), penalty fine appeals, criminal litigation, or other litigation procedures will follow.
Diversification in litigation due to a rise in customs-related issues
Recently, in the areas of customs and international trade, there are new tax issues before due to increase in trades among multinational corporations, increasing number of FTAs, and emergence of new trade products (such as virtual currency) and emergence of a trade deal structure combined with new financial techniques. In light of this situation, the audit power of the customs authorities has expanded and strengthened. Also, customs-related disputes have not been limited to traditional issues such as customs valuation but have been expanding to various other topics.
Strengthened foreign exchange inspections/investigations
Increase in trade deal size has resulted in a steep increase in the size of foreign exchange transactions. This has resulted in a growing need to regulate violations of the Foreign Exchange Transaction Act, price manipulation, offshore property transfers, and hiding of criminal proceeds. Accordingly, the Korea Customs Service has recently strengthened foreign exchange inspections/investigations and expanded its organization (including establishing the Foreign Exchange Investigation Division within regional customs offices and increasing relevant staff members). As a result, criminal and administrative disputes in the area of foreign exchange transactions are expected to significantly increase in the future.
