Very late, the National Tax Service imposed a tax of 9.5 billion earned on a former employee who received an award from the US government for blowing the whistle against Hyundai Motor Company. Due to the sudden notice after delaying the tax notice for over a year, the worker was put in a position to pay taxes close to 10 billion won overnight.
According to an MBC report on the 10th, Mr. Kim, who served as the manager of Hyundai Motor Company, revealed that Hyundai Motor Company’s overhauled engine had a defect in 2016 and that the company knew about it but hid it. Engine failure can lead not only to noise, but also to breakage, engine damage, impact and fire.
Mr. Kim relayed this fact to the Korean Ministry of Land, Infrastructure and Transport and the Transportation Security Administration in the United States. As a result of the investigation, when the allegation was confirmed to be true, the US side paid about 28 billion won, which is equivalent to 30% of the penalty imposed on Hyundai Motor Company, to Mr. Kim as a reward. Kim is said to have finally received 19 billion won, not including attorney fees.
Mr Kim asked the National Tax Service last year whether he should pay taxes after receiving the prize money. The Income Tax Act Enforcement Decree states that awards received by foreign governments and international organizations or awards received by state or local governments through reporting in the public interest are exempt from taxation. In the case of Mr. Kim, if the bounty is recognized as applicable to this case, he does not have to pay taxes.
However, the National Tax Service, which had been delaying the answer, only notified the tax on the 9th, which is one year and two months after the inquiry was made. The deadline for paying the comprehensive income tax this year was the 31st of last month. The National Tax Service argued that the money received by Mr. Kim is a ‘bounty received from a foreign government’ and therefore not subject to tax exemption. As a result, the amount that Mr. Kim has to bear is equivalent to 9.5 billion won, including comprehensive income tax. Although the whistleblower took a big risk, around half of the reward money was taken by the state.
Mr. Kim told MBC, “(If you blow the whistle), you will be fired and prosecuted, and you will inevitably face many disadvantages.” Mr Kim is dissatisfied with the National Tax Service’s decision and intends to request a correction.
Reporter Kim Ji-hoon germany@kmib.co.kr
