The Board of Audit and Inspection has launched an audit into how "tax exemption, reduction, and deduction systems," totaling 80 trillion won, are being run, according to reports on the 6th. The targets are the Ministry of Economy and Finance's Tax Policy Office and the National Tax Service.
This audit comes four months after President Lee Jae-myung in Mar. ordered, "Overhaul from scratch the tax expenditure that reaches 80 trillion won annually." An official at the Board of Audit and Inspection said, "We began on-site auditing on the 1st and plan to continue through the 24th," adding, "Based on the annual audit plan, a document-based review led us to launch a full-scale audit."
The Board of Audit and Inspection is currently auditing the operation of various systems that reduce taxes, such as exemptions, reductions, and deductions. This year, exemptions, reductions, and deductions total 80.5 trillion won. That rose sharply year by year from 70.5 trillion won in 2024 to 76.5 trillion won in 2025. Although the state is not directly spending money like a budget, the amount of forgone tax revenue is steadily increasing.
There have been calls to examine parts where exemptions, reductions, and deductions were supposed to be temporary but have been repeatedly extended. Typically, a sunset clause of about three years is set and the extension is reconsidered, but many cases have been routinely extended without sufficient performance evaluations whenever the sunset date comes around.
An analysis by ChosunBiz of 68 exemption, reduction, and deduction items that could end with the year-end sunset found that 54 items, or 79.4% of the total, have been maintained for more than 10 years. Accordingly, the Board of Audit and Inspection is expected to focus its audit on cases where exemptions, reductions, and deductions were repeatedly extended whenever the sunset date approached.