A tax code revision bill that the government and ruling party are pursuing under the banner of "rationalizing economic penalties" has been criticized as poorly designed and lacking consistent standards. Critics say the package includes cosmetic provisions — such as raising the maximum fine fivefold on a dormant clause that has never been enforced — undermining the original policy goal of reducing uncertainty for businesses.
According to political sources on the 19th, the office of Rep. Lee Jong-wook of the People Power Party, a member of the National Assembly's Strategy and Finance Committee, analyzed the basis for calculating sanctions in the bills easing economic penalties, part of the government's policy agenda, and identified flaws in legislation that mechanically borrowed standards from unrelated laws. The bill under scrutiny is an amendment to the Act on Special Cases Concerning the Refund of Customs Duties, sponsored by Rep. Ahn Do-geol of the Democratic Party, which governs sanctions against exporters that fail to submit documents. At its core, the measure would convert a "fine of up to 10 million won" imposed when companies refuse customs authorities' requests for data into an administrative penalty of "up to 50 million won."
But a review by the National Assembly's chief expert adviser and a check by Lee's office found that the clause has been enforced zero times over the past four years since 2022. Critics argue that raising the sanction ceiling fivefold, from 10 million won to 50 million won, for a provision with no enforcement record only heightens anxiety among businesses unnecessarily.
The government cited parity with other laws as the basis for the increase. At a tax subcommittee review held on the 1st of this month, the Ministry of Finance and Economy said the change was "aligned with the conversion to a 50 million won administrative fine for refusing customs officials' data requests under the general Customs Act," adding that it also "took into account inflation since the amount was set in 1997 and the reduced deterrent effect of replacing a criminal penalty with an administrative one."
Lee countered by noting that the two laws are fundamentally different in nature, criticizing what he called the government's mechanical administrative convenience. "Under the general Customs Act, the issue is a company refusing when customs authorities conduct inspections and investigations on their own authority, whereas the refund special cases act concerns a procedure in which a company applies to get back taxes it has already paid," he said. "It is unjustified to raise the sanction ceiling by uncritically importing a figure from another law when the positions are completely reversed, and the amount should be reviewed separately."
The inconsistency in sentencing standards across the government's bills easing economic penalties was also flagged as a weakness. In the case of the amendment to the Act on Special Cases of Customs Duties for Free Trade Agreements (FTA), submitted alongside the other bill, a fine previously set at 3 million won was converted into an administrative penalty with a ceiling of only 10 million won. Moreover, for some negligence-based violations, the existing administrative fine ceiling was actually lowered from 5 million won to 2 million won. Critics point to this as evidence that the ministry lacks consistent internal guidelines for calculating administrative fines.
The finance ministry sought to contain the criticism, saying it "plans to establish new imposition standards in the enforcement decree, applying 10 million won for a first violation and 50 million won for a fourth or subsequent violation on a graduated basis." Despite the explanation, lawmakers repeatedly criticized the flawed legislative design during the Assembly's review.
Rep. Yoon Hou-duck of the Democratic Party said: "If you are going to impose a low amount in practice, why write 50 million won into the law in the first place and unsettle the public? This is an intimidating sentencing demand, like asking for a heavy sentence just to scare people." Rep. Ahn Sang-hoon of the People Power Party also said the government "should establish a standard framework for administrative fines on violations of economic order, rather than approaching each case individually when overhauling the system."
In the end, following the shared criticism from both parties, the tax subcommittee deferred a vote on the bill. With the measure halted at its first hurdle in the Assembly over the lack of a rational basis for calculating sanctions, the government now has little choice but to conduct a full review of an appropriate compromise on the maximum administrative fine and of standards for similar legislation, and report back to the Assembly.