TAX PENALTIES

A. Penalty on Failure to File Returns

If a resident either fails to file a tax return or under-reports the relevant income, an

amount equivalent to 20% of the income unreported or under-reported will be

income amount un(under)reported

X tax amount properly calculated X 20%

proper income amount to be reported

included in the calculation of tax amount as follows:

B. Penalty on Non-payment or Underpayment of Tax

When tax is not paid properly, the penalty amounts to 0.03% on the unpaid amount per

day.

When a taxpayers association fails to fully pay the income tax due within the time

required, a penalty of 5% of the unpaid amount shall be added to the amount of tax due.

C. Penalty tax on Failures to Withhold Tax

If a person subject to tax withholding fails to withhold tax at source or fails to pay the

government tax withheld within the payment period, a penalty of 10% of the amount of

tax not withheld is added to the amount of withholding tax.

D. Penalty tax on Failures to Report Withholding Invoices

If a concerned person fails to submit a payment report within the reporting period or if

the reported facts concerning payment are found to be unclear as specified by the

Presidential Decree, a penalty in the amount of 2% of the payment due shall be charged.

If a concerned person fails to issue or submit a proper tax invoice regarding the

transaction involved, a penalty in the amount of 1% of the transaction shall be charged.

E. Penalty tax on related to Gathering Relevant Tax Invoices

If a taxpayer has an obligation to keep double entry books but fails to keep available invoices

in the form generally accepted (including credit card receipts) as supporting evidence for the

payment of goods received and services rendered, a penalty may be imposed in the amount of

2% of the total value of such unsupported transactions. The penalty may be applied even if

the expense deduction is sufficiently substantiated to be allowed.

If a taxpayer who has an obligation to keep double entry books does not submit a list of

invoices to the tax office, a penalty tax amounting to 1% of the unreported amount shall

be charged.

F. Penalty tax on Failures to maintain Adequate Books and Records

If a taxpayer operating a business fails to maintain proper books and records, such

taxpayer will be subject to penalty tax equal to 20% of the amount of tax due for the tax

year involved multiplied by the following rate "R."

R = improperly documented portion of taxable income divided by total taxable income