CONTENTS
- 1. The Original Structure of Corporate Tax Audits and the Reality of the Burden on Companies
- - Understanding Tax Audits - Regular Audits vs. Irregular Audits
- 2. The Corporate Tax-Audit Timing Selection System, Fully Implemented in 2026
- - How the Timing Selection System Changes the Way Companies Prepare for Audits
- 3. The National Tax Service Discloses Priority Verification Items for Corporate Tax Audits
- - Items That Require Internal Review Right Now
- 4. Changes in the Method of Corporate Tax Audits and Practical Response Strategies
- - The Response Framework Corporations Must Establish in the Changed Audit Environment
- - Daeryun Law Firm LLP's Tax-Audit Response System
1. The Original Structure of Corporate Tax Audits and the Reality of the Burden on Companies
A corporate tax audit is an official procedure through which the National Tax Service verifies whether a corporation's tax filings are appropriate.
Audits are divided into regular audits and irregular audits, and regular audits proceed by selecting the target corporations according to a set cycle.
The problem lay in the existing method.
When the National Tax Service unilaterally notified a company of the schedule, the company had to accept it as given, and auditors would remain stationed at the company's offices for several months, examining the operations as a whole.
Even when a tax audit overlapped with critical management periods such as the closing of accounts, the shareholders' meeting, or IR activities, there was no means of adjusting it, and during an audit, operations as a whole were often, in effect, paralyzed beyond the tax issues alone.
Understanding Tax Audits - Regular Audits vs. Irregular Audits
A regular corporate tax audit is conducted periodically by selecting targets based on criteria such as filing compliance, industry, and scale.
By contrast, an irregular audit is initiated when a specific suspicion is detected, such as a report of tax evasion, a mismatch in tax invoices, or financial-information analysis, and in some cases it proceeds without advance notice.
The timing selection system and the disclosure of priority verification items under this set of reform measures pertain to regular corporate tax audits, while the existing method is maintained as is for irregular audits.
Accordingly, managing the appropriateness of filings on an ongoing basis and routinizing internal review based on the priority verification items is the most practical way to reduce the risk of an irregular audit.
2. The Corporate Tax-Audit Timing Selection System, Fully Implemented in 2026
The corporate tax-audit timing selection system is a system that allows a target of a regular tax audit to directly choose, within a three-month range, when the audit will commence.
The National Tax Service fully introduced this measure beginning in April 2026.
Under this system, a taxpayer selected as a target of a regular corporate tax audit may, after receiving the notice, choose when the audit will commence within a three-month range on a monthly basis (first choice and second choice).
In addition, as before, formal advance notice is given 20 days before the audit actually commences.
How the Timing Selection System Changes the Way Companies Prepare for Audits
The key effect of the timing selection system is "securing predictability."
A company can coordinate the timing of the audit to avoid management-critical schedules such as the closing of accounts and the shareholders' meeting, and prepare by focusing solely on tax issues in line with the confirmed timing.
In practice, it is important to review the internal schedule immediately upon receiving the notice, carefully select the first- and second-choice timing, and systematically organize the relevant materials by that point.
In other words, making the fullest use of the preparation period available is the true way to take advantage of this system.
3. The National Tax Service Discloses Priority Verification Items for Corporate Tax Audits
There are types of taxation that repeatedly become an issue in corporate tax audits.
Through this set of reform measures, the National Tax Service has decided to disclose in advance the items that it focuses on verifying during a tax audit and to provide them as informational materials when an audit commences.
This is a measure intended to allow companies to review themselves at the corporate-tax and income-tax filing stage and to prepare the relevant materials in advance, before an audit.
Creating an environment in which companies can manage risk on their own is the direction of this policy.
Items That Require Internal Review Right Now
The priority verification items disclosed by the National Tax Service consolidate the tax risks that frequently become an issue in practice.
② Omission of sales reporting through the representative's personal account
③ Arbitrary waiver of accounts receivable without justifiable grounds
④ Recording of fictitious labor costs where no work was performed
⑤ Improper tax credits for research and human-resources development expenses
⑥ Omission of the calculation of deemed interest on provisional payments and the like
⑦ Issuance and receipt of tax invoices that differ from the facts
These items should be used directly as an internal review checklist, measured against whether the supporting documentation is complete before an audit commences.
In particular, because fictitious labor costs and provisional payments are items repeatedly flagged at small and medium-sized corporations, conducting a preliminary review together with a tax agent is recommended.
4. Changes in the Method of Corporate Tax Audits and Practical Response Strategies
The manner in which corporate tax audits proceed is itself changing.
Improving on the previous practice of remaining stationed at a company's offices for several months, the National Tax Service is implementing a policy of "minimizing on-site stationed audits," under which auditors remain on site only when truly necessary.
This is a measure intended to protect the continuity of a company's operations and to reduce the practical burden during the audit period.
That said, the National Tax Service has made its position clear, stating that "to establish tax justice, tax audits will be conducted strictly, while the audit method will be reformed to be as reasonable and predictable as possible."
The Response Framework Corporations Must Establish in the Changed Audit Environment
The fact that on-site stationing has been reduced does not mean that the intensity of an audit has lessened.
If anything, as the audit method shifts toward a focus on the submission of materials, how systematically the materials were organized in advance has a direct effect on the audit outcome.
From the moment the audit schedule is confirmed under the timing selection system, it is key to review the supporting documentation against the priority verification items and to prepare response arguments for each point at issue.
The outcome of a corporate tax audit varies with how thoroughly one has prepared.
Reviewing anticipated points at issue proactively through close collaboration with a tax agent, and completing a response framework before the audit commences, is the most effective strategy.
Daeryun Law Firm LLP's Tax-Audit Response System
Daeryun Law Firm LLP operates an integrated response framework that diagnoses in advance the tax risks that may arise throughout the entire corporate tax audit process and builds an audit response strategy step by step.
First, at the stage before an audit commences, we conduct a preliminary risk analysis based on the company's financial structure, filing records, and whether any priority verification items apply, and we select the points at issue most likely to become problematic in the actual audit.
On this basis, we comprehensively review the consistency of the supporting documentation, the appropriateness of the accounting treatment, and the legal validity of the transaction structure.
During the audit, with respect to the National Tax Service's inquiries and requests for the submission of materials, we construct consistent response arguments from a legal and tax perspective and manage the direction of the response for each point at issue so that it does not lead to unnecessary expansive interpretation or additional taxation.
After the audit concludes, we review the appropriateness of the taxation disposition and, where necessary, continue our response in a direction that protects the company's rights, extending through objection proceedings, appeals to the Tax Tribunal (a request contesting an administrative action before an agency prior to court litigation, comparable to seeking administrative review), and other remedies against the disposition.
Daeryun's Tax Group, the ninth-largest law firm in the Republic of Korea (based on 2025 National Tax Service value-added tax filings), includes numerous tax attorneys, certified tax accountants, and certified public accountants with experience at the National Tax Service and experience handling corporate and individual tax audits as well as tax remedy proceedings.
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