Korea shares digitalization know-how on taxation with India, Georgia

National Tax Service (NTS) Commissioner Kim Dae-ji, right, poses with Levan Kakav, the head of the Revenue Service of Georgia, after their meeting in Tbilisi, Georgia, Feb. 21. Courtesy of NTS

By Yoon Ja-young

Korea's tax agency has shared its know-how in the digitalization of taxation with the tax agencies of India and Georgia, which can decrease the chances of tax evasion and thus enhance taxpayers' trust in the tax system.

According to the National Tax Service (NTS), its commissioner, Kim Dae-ji, had a meeting with Levan Kakav, the head of the Revenue Service of Georgia, in the country's capital of Tbilisi, Feb. 21. It was the first official meeting between the tax agency chiefs of the two countries. Kim also had the sixth Korea-India tax commissioners' meeting with his counterpart, Tarun Bajaj, in New Delhi, India, Feb. 24.

The meetings come as the NTS has been engaged in "diplomatic efforts" to seek sustainable growth jointly with tax agencies in other countries.

India is a core partner of Korea in its New Southern Policy, a diplomatic initiative focused on Southeast Asia and India. As the two countries' diplomacy was upgraded to a "special strategic partnership" in 2015, bilateral trade increased to a record high in 2021, as Korean companies have been massively investing in the country. However, the increase in economic exchange also led to conflicts and uncertainties over taxation for Korean businesses operating in India.

National Tax Service (NTS) Commissioner Kim Dae-ji, left, poses with his Indian counterpart, Tarun Bajaj, after their meeting in New Delhi, India, Feb. 24. Courtesy of NTS

The chiefs of the tax agencies of Korea and India made a significant achievement, resolving the problem of the dual taxation of Korean businesses operating in India. Kim stressed that taxation problems should not hinder businesses, so as to promote bilateral trade and investment. He especially emphasized preventing the dual taxation of businesses by using Mutual Agreement Procedures or Advance Pricing Arrangements, which aim at resolving taxation issues in international transaction through consultation between tax agencies. They agreed that the two parties should cooperate further to help businesses with tax problems effectively so that they can make stable investments and concentrate on management, and Kim also thanked his Indian counterpart for operating a taxation consulting desk for Korean businesses.

The Korean and Indian tax chiefs also agreed to close coordination to tackle offshore tax evasion. The topic has been a main item on the Indian tax agency's agenda since October 2021, and Korea shared its know-how and suggested operating a communication channel for the timely exchange of information.

Korea and Georgia have also been strengthening their economic cooperation under President Moon Jae-in administration's New Northern Policy, especially in the areas of resource development and infrastructure investment. Since joining the OECD Forum on Tax Administration in 2018, Georgia's tax agency has been particularly interested in Korea's digitalization of taxation.

Kim presented to both his Indian and Georgian counterparts Korea's digitalization of taxation. He suggested ideas such as using blockchain technology and big data to cope with tax evasion, as well as a virtual tax agency using the metaverse and a tax secretary service based on AI. The taxation chiefs agreed that digitalization should be the keyword moving forward to offer better service to taxpayers while decreasing the possibility of tax evasion and gaining more trust from taxpayers.

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