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Global companies hamstring customs probes by omitting, deleting tax info: KCS data

Published: 30 Mar. 2026, 16:52 Updated: 30 Mar. 2026, 19:49

A royalty contract related to imported goods submitted by a company in 2025 [KOREA CUSTOMS SERVICE]

Global companies are increasingly undermining customs investigations by refusing to submit tax information or deleting key materials before turning them in, according to recent data.

Critics say that because the fines are disproportionately low compared to the taxes owed, authorities have few effective means to respond when companies choose to hold out.

A total of 708 customs investigations were suspended over the past five years due to delays in importers' document submissions, according to Korea Customs Service (KCS) data obtained by Democratic Party Rep. Park Min-kyu on Saturday. Multinational companies accounted for 427 cases — 60.3 percent of the total — despite representing 1.6 percent of all import firms.

The number of suspended investigations involving multinational firms rose from 58 in 2021 to 104 in 2025, an increase of about 79 percent.

“This suggests global companies are effectively neutralizing customs investigations by refusing to cooperate with document submissions or by deleting key information before submission,” Rep. Park’s office said.

In one case, a royalty contract submitted by a multinational firm for imported goods contained more than 80 percent of its contents redacted, making it nearly impossible to verify.

As such cases increase, investigations are taking longer to complete. In 2025, customs probes involving multinational companies took an average of 104 days to conclude, about 1.6 times longer than the 67-day average for domestic firms.

Stacks of direct-purchase parcels are seen at the express cargo logistics center of Incheon Airport Regional Customs in Jung District, Incheon, on Nov. 20, 2025. [NEWS1]

Industry analysts point to loopholes in the system as a key reason companies can stall investigations. While regulations exist to penalize failure to submit documents, fines are capped at 50 million won ($33,000) and cannot be imposed repeatedly. In related-party transactions, the total cap, including secondary penalties, is 300 million won — significantly lower than the average additional tax imposed on multinational firms, which stands at 3.59 billion won.

This structure gives companies an incentive to delay submissions rather than comply.

The issue is also reflected in tax litigation outcomes. The KCS recorded a 20 percent loss rate in cases against domestic firms. However, the rate doubled to 48.3 percent in cases involving multinational companies.

In some cases, companies withheld documents during investigations but selectively submitted favorable evidence during litigation.

For example, one pharmaceutical importer first insisted it did not have invoices for certain imports during the investigation, but later submitted partial documentation in court, weakening the government’s case and resulting in a partial loss.

The government is considering introducing daily penalty charges, similar to those used in national tax enforcement. These penalties could be imposed daily for noncompliance, at up to three-thousandths (0.3 percent) of the reported amount or up to 5 million won per day, with repeated imposition allowed.

“Some importers are effectively neutralizing customs investigations by simply paying fines or delaying submissions, while authorities lack adequate tools to respond,” Park said. “If companies refuse to submit tax data, a system of compulsory fines similar to that used by the National Tax Service should be introduced, and any materials not submitted within the investigation period should be barred from being used as evidence in appeals or litigation.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM YEON-JOO [[email protected]]