The dental laboratory corporation D applied for a tax credit for R&D expenditure, claiming labor costs amounting to tens of millions of won. The National Tax Service, upon receiving the application, requested clarification from the corporation, stating that the status of the research institute's personnel could not be confirmed.
The corporation submitted clarification materials regarding the recognition of research institutes received from Korea Industrial Technology Association.
The National Tax Service inquired with the association about the recognition of the research institute, and the association noted, "The research institute was voluntarily canceled before the monitoring period, and there has been no fact of re-recognition since then." The D corporation had submitted manipulated documents. The National Tax Service denied the tax credit for R&D research institutes applied for by D corporation and collected the entire deducted amount.
Corporations that received tax credits through false means, such as establishing fictitious research institutes or fabricating overseas papers, were identified en masse.
As a result of a detailed analysis of unfair deduction allegations, the National Tax Service identified 864 corporations last year and recovered 27 billion won that these corporations had inappropriately deducted, it announced on the 20th. The scale of unjust tax credits for R&D that the National Tax Service recovered increased tenfold in three years.
Since 2021, as the number of corporations improperly applying for R&D tax credits has increased, the National Tax Service has been strengthening verification of these credits through a specialized review officer and a dedicated local team starting in 2023.
Methods of improperly receiving R&D tax credits include ▲ submitting papers copied from others ▲ falsely registering regular employees as researchers ▲ applying for general research and development as new growth and source technology development ▲ altering information about research institutes falsely.
Copying others' papers refers to the act of reproducing or quoting papers from overseas and simply altering or imitating figures or images to pretend that actual research and development was carried out. There were also cases where consulting firms prepared explanatory materials in the process of post-management for corporations that did not conduct R&D activities, such as research notebooks and other research evidence.
An education service company applied for a tax credit claiming to have R&D personnel, but verification by the National Tax Service revealed the individual was a regular staff member responsible for promotion and education.
As a result of a thorough analysis and detailed verification of corporations that applied high tax credits for new growth and source technology (30-40% deduction rate) and national strategic technology (40-50% deduction rate), it was found that 69 corporations applied higher deduction rates instead of the general research and development deduction rate (25%).
After collecting and analyzing data on corporations that have not recognized research institutes or have had their recognition canceled from related departments including the Ministry of Science and ICT, it was confirmed that 178 corporations had received improper deductions. The National Tax Service recovered 3 billion won from these 178 corporations.
There were also 48 corporations that excessively deducted tax credits without excluding research and development grants when applying for tax credits.
An official from the National Tax Service said, "We will strengthen information collection and monitoring of intelligent tax evasion activities such as establishing fictitious research institutes and reproducing others' papers, and we will continuously expand verification of corporations with unclear research and development activities to reduce tax blind spots."