Voluntary Compliance Customs Administration (KR0048)

Transition towards the Customs Administration System Based on Voluntary Compliance
Commitment Start and End Date
September 1, 2018 ~ August 31, 2020
Lead Implementing Agency/Actor
Creative Planning and Finance Office, Korea Customs Service
Commitment Description
What is the public problem that the commitment will address?
The customs administration has been done primarily through coerced investigation, tax charge, crackdown and publishment, but such practices have created additional social costs and conflicts such as disobedience on a large scale and tax conflict. The existing customs and border management methods, considering environmental changes, are limited in their capacity in protecting the public; therefore changes need to be made to operational strategies of the customs and border control.
What is the commitment?
The purpose of this commitment is to create a voluntary compliance environment focused on “cooperation and prevention” to reduce conflicts with the public and increase the level of understanding and acceptance over relevant policies in customs and border control. To do so, 1) the customs administration will be reformed from coerced investigation and tax imposition to preemptive provision of information to facilitate the public’s voluntary compliance and tax payment. For example, the import tax settlement system which allows businesses to autonomously inspect and settle the unpaid tax amount notified by the customs will be expanded. Also, the pre-evaluation system, a consulting program where the Commissioner of Customs decides on the tax amount and taxable price before the declaration will be expanded. 2) Instead of prosecuting offenders, information will be provided on areas where violation is most likely to occur in order to eliminate conflicts and protect human rights. In this regard, information on declarations errors and violation and educational briefings will be provided prior to crackdown and sanctions in order to encourage honest and accurate tax report. In addition, supervisory crackdowns on relevant industries regarding minor yet frequently violated matters will be preannounced and carried out. 3) The public’s opinions on travelers’ personal belongings, most relevant to the public, will be collected and reflected in policy making to encourage voluntary declarations and autonomous compliance through carrying out a public survey, operating the public design group, participating in public participation forums. The public’s level of understanding on customs policies will increase, and their right to know will be ensured through preventing coerced administrative execution and customs violations through public-private cooperation and autonomous compliance. Furthermore, conflicts amongst the business, government and public will be minimized thanks to the preemptive provision of information and autonomous compliance, and the public’s trust and confidence will be boosted through conducting safer and more effective customs and border control with more accurate export-and-import declaration through voluntary participation.
How will the commitment contribute to solve the public problem?
The detailed implementation methods are as follows: 1) to build a system to inform the public of how to file a customs declaration tailored to a type of tax payers using big data including the export-and-import declaration and register and disclose the information via the Customs Law Information Portal; 2) to provide tax payment support services tailored to companies via the e-customs clearance system to help the individuals and businesses to file a customs declaration without an error by disclosing and sharing information on possible errors on tax payment; 3) to inform the public of the possibility of legal violation through monitoring online advertisements on reselling products directly purchased from overseas and selling counterfeited products in partnership with operators of internet communities; 4) to reform the government’s internal performance evaluation system from examining exposure, crackdown and collection to the operation of dutiful declaration support, tax payment cooperation programs and preliminary guidance.
Why is this commitment relevant to OGP values?
Citizen Participation / Transparency / Governance through new technologies
Exchange and Peer Learning
N/A
Additional Information
N/A
Milestone Activity with a Verifiable Deliverable
Updating the DB of the Customs Law Information Portal
Building the system to provide information on possible tax payment errors tailored to businesses
Establishing the check-list of errors per industry and item
Hosting an annual briefing per customs office
Publishing a guide book on dutiful tax declaration
Carrying out an initiative to support SMEs from getting officially certified
Disclosing the evaluation standard of compliance and providing training
Operating the public design group to encourage voluntary tax declaration
Conducting a survey on the public’s level of awareness on the declaration of personal belongings when traveling
Carrying out the regular import-tax settlement system
Providing preliminary information on legal violation (on- and off-line)
Conducting monitoring and guidance activities to prevent crimes and irregularities regarding customs duty
Promoting the preemptive provision of legal information offered offline
Contact Information
Name of Responsible Person from Implementing Agency
Kibong Doh
Title, Division
Deputy Director, Creative Planning and Finance Officer
Email and Phone
+82-42-481-7715
Other Actors Involved,
Creative Planning and Finance Officer, Audit Policy Division, Corporation Audit Division, Investigation Planning Division, Cyber Investigation Division at Seoul Customs of Korea Customs Service
Web portal groups (e. g. a Naver cafe, Joonggonara), online shopping malls (e. g. the 11th street) Associations of major industries including automobile and fabric Customs administration innovation T/F Various stake-holders including customs brokers and logistics companies

12. Transition towards the Customs Administration System Based on Voluntary Compliance

Commitment Text:

"Transition towards the Customs Administration System Based on Voluntary Compliance"

The purpose of this commitment is to create a voluntary compliance environment focused on "cooperation and prevention" to reduce conflicts with the public and increase the level of understanding and acceptance over relevant policies in customs and border control. To do so,

1) the customs administration will be reformed from coerced investigation and tax imposition to preemptive provision of information to facilitate the public's voluntary compliance and tax payment. For example, the import tax settlement system which allows businesses to autonomously inspect and settle the unpaid tax amount notified by the customs will be expanded. Also, the pre-evaluation system, a consulting program where the Commissioner of Customs decides on the tax amount and taxable price before the declaration will be expanded.

2) Instead of prosecuting offenders, information will be provided on areas where violation is most likely to occur in order to eliminate conflicts and protect human rights. In this regard, information on declarations errors and violation and educational briefings will be provided prior to crackdown and sanctions in order to encourage honest and accurate tax report. In addition, supervisory crackdowns on relevant industries regarding minor yet frequently violated matters will be preannounced and carried out.

3) The public's opinions on travelers' personal belongings, most relevant to the public, will be collected and reflected in policy making to encourage voluntary declarations and autonomous compliance through carrying out a public survey, operating the public design group, participating in public participation forums. The public's level of understanding on customs policies will increase, and their right to know will be ensured through preventing coerced administrative execution and customs violations through public-private cooperation and autonomous compliance. Furthermore, conflicts amongst the business, government and public will be minimized thanks to the preemptive provision of information and autonomous compliance, and the public's trust and confidence will be boosted through conducting safer and more effective customs and border control with more accurate export-and-import declaration through voluntary participation.

The detailed implementation methods are as follows:

1) to build a system to inform the public of how to file a customs declaration tailored to a type of tax payers using big data including the export-and-import declaration and register and disclose the information via the Customs Law Information Portal;

2) to provide tax payment support services tailored to companies via the e-customs clearance system to help the individuals and businesses to file a customs declaration without an error by disclosing and sharing information on possible errors on tax payment;

3) to inform the public of the possibility of legal violation through monitoring online advertisements on reselling products directly purchased from overseas and selling counterfeited products in partnership with operators of internet communities;

4) to reform the government's internal performance evaluation system from examining exposure, crackdown and collection to the operation of dutiful declaration support, tax payment cooperation programs and preliminary guidance.

Milestones:

12.1 Updating the DB of the Customs Law Information Portal

12.2 Building the system to provide information on possible tax payment errors tailored to businesses

12.3 Establishing the check-list of errors per industry and item

12.4 Hosting an annual briefing per customs office

12.5 Publishing a guide book on dutiful tax declaration

12.6 Carrying out an initiative to support SMEs from getting officially certified

12.7 Disclosing the evaluation standard of compliance and providing training

12.8 Operating the public design group to encourage voluntary tax declaration

12.9 Conducting a survey on the public's level of awareness on the declaration of personal belongings when traveling

12.10 Carrying out the regular import-tax settlement system

12.11 Providing preliminary information on legal violation (on- and off-line)

12.12 Conducting monitoring and guidance activities to prevent crimes and irregularities regarding customs duty

12.13 Promoting the preemptive provision of legal information offered offline

Start Date: April, 2018 End Date: August, 2020

Editorial Note: For the full text of the commitment, please see Korea's 4th National Action Plan 2018-2020 at https://bit.ly/2JvQr98.

Context and Objectives

Traditionally, customs administration in South Korea was characterized by coerced investigations, tax charges, crackdowns, and punishment. As noted in the action plan, this led to social and other costs in the form of civil disobedience and tax-related conflict.

The purpose of this commitment is to reform coercive customs administration into a conciliatory environment of voluntary compliance, focusing on "cooperation and prevention." Government and civil society stakeholders anticipate that this approach will reduce conflict and increase mutual understanding between citizens, customs, and border control. This, in turn, will lead to greater citizen adherence to tax protocols, more effective customs administration, and the many economic benefits associated with such developments. To do this, the commitment primarily aims to promote preemptive information disclosure in a number of areas, be it to facilitate voluntary tax compliance, or to inform citizens of potential declaration errors and violations before they occur.

This commitment is verifiable as it outlines a number of measurable milestones, such as publishing a guidebook on tax declarations, creating a system to provide information on tax payment errors, and promoting the preemptive provision of legal information online. However, several milestones lack specificity and often refer to broad activities with limited indication of scope. For example, the commitment does not define what is meant by the "operation of the public design group to encourage voluntary tax deduction" or "carrying out the regular import-tax settlement system."

This commitment is relevant to the OGP value of access to information as a number of activities aim to preemptively release government-held information on customs administration. The commitment is also relevant to the OGP value of civic participation as certain activities will empower citizens to participate in, and influence, decision-making processes. For instance, results from a public survey on the declaration of personal belongings when traveling will inform related policymaking. In addition, the use of online platforms to publish government information also makes this commitment relevant to the value of technology and innovation for transparency.

This commitment stands to have minor potential impact on reforming customs administration in South Korea. According to the action plan, at the time this commitment was designed, customs administration in the country was largely characterized by confrontational features of coercion and sanction. This led to tension between the service providers and recipients, and instances of mass-scale disobedience in the form of tax avoidance and defaults.

This commitment endeavors to comprehensively reform this adversarial approach into one of voluntary compliance, premised on the preemptive disclosure of information; but this will entail a difficult shift in organizational culture of customs administration While the overall objective of this commitment is a positive step forward, the scale of the challenge at hand is compounded by the limited specificity of several activities and milestones, to limit the scope of this commitment.

Next steps

An environment of voluntary tax compliance, premised on preemptive government disclosure of information, could be a significant reform for customs administration in South Korea. If effectively and holistically implemented, such reform could transform the relationship between tax assessors and the public.

However, as the scope of this commitment remains unclear, the IRM does not recommend that this commitment is carried forward into future action plans in its current form.

12. Transition towards the Customs Administration System Based on Voluntary Compliance

Substantial:

Most activities for this commitment were completed, except for an initiative to support SMEs getting officially certified. Key challenges include increasing citizens’ awareness of legislation to prevent unintentional offenses and changing government officials’ attitudes to provide better support. [10]