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South Korea: New rights for taxpayers subjected to a dawn raid


The Korean government recently promulgated a new presidential decree imposing additional requirements on the National Tax Service (NTS) with regards to documents seized during an unannounced tax audit or 'dawn raid'.

On February 13 2018, the Korean government officially promulgated the Presidential Decree (Decree) implementing recent amendments to the National Basic Tax Act. The Decree sets forth new standards the NTS must meet to temporarily seize documents during a dawn raid, maintain custody of such documents, and return such documents.

Before the Decree, when the NTS conducted a dawn raid, it would present the taxpayer a list of documents subject to temporary seizure. This list was often very general in nature, for example, demanding a 'PC' or 'hard drive' rather than listing the documents or types of documents contained on the PC or hard drive. While the taxpayer could choose not to allow the NTS to take such documents, taxpayers rarely did so in an effort to maintain a good working relationship with the NTS.

Further, once the documents were in the custody of the NTS, it was very difficult for the taxpayer to request their return. This was because the taxpayer often did not know which actual documents the NTS had seized and, even if the seized documents were identified, the NTS would refuse return requests claiming that the return of the documents would affect the audit.

Under the Decree, to temporarily seize documents, the NTS must allege the existence of one or more 'causes for denial of the presumption of good faith cooperation'. These causes include: the taxpayer's non-performance of an obligation to cooperate; an allegation of dishonest transactions; a tip-off from a whistleblower; the existence of materials clearly indicating an omission or error in a taxpayer's reported information; and bribery of tax officials. At the time of seizure, the NTS must provide notice to the taxpayer of the grounds for the temporary seizure, inform the taxpayer that the seizure requires the taxpayer's consent, and that the taxpayer may receive back the seized documents upon its request. However, if the taxpayer refuses to allow the temporary seizure of certain documents, the NTS can retain such documents if it has a 'legitimate cause'.

Once the documents are in the NTS's temporary custody, the NTS is required to return them to the taxpayer after a maximum of 28 days from the date of a request for their return. If the NTS determines that the documents have no impact on the audit, it must return them immediately and must return all documents at the conclusion of the audit.

If the NTS fails to abide by these new requirements, the taxpayer could challenge in the courts the validity of any assessment arising from such 'illegal' seizure and demand the assessment be cancelled.

While the Decree is a positive development for taxpayers, how the NTS will interpret the regulations remains to be seen. Given the NTS's history of aggressive audits, it is likely the NTS will narrowly interpret the requirements in the Decree. Taxpayers, therefore, should monitor developments in this area (including the revision of the NTS's internal regulations on dawn raids) and revise their internal dawn raid guidelines and action plans to reflect the Decree and the NTS's future implementation of the Decree.


John Dryden

Kyu Dong Kim

John Dryden ( and Kyu Dong Kim (

Yulchon LLC

Tel: +82 2 528 5077 and +82 2 528 5542


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