National Tax Service Launches First-Ever Statement Submission System to Track Investment Fund Flows

To enhance transparency in the investment market, the National Tax Service (NTS) will begin receiving 'Investment Partnership Statements' from this year, containing information on partners and investment status, to meticulously manage fund operation details. This initiative is the result of ongoing efforts to improve structural vulnerabilities in unfair trading practices, such as stock manipulation and tax evasion, which have exploited the identities of investment partnership members, and to ensure transparency for the development of the capital market.

Investment partnerships serve as a channel for individual investors to make small, diversified investments in promising unlisted companies or startups. They also play a role in supplying venture capital to early-stage companies struggling to secure funding due to a lack of collateral or track record. The government has operated a system providing tax benefits, such as up to 100% income deductions and tax exemption on capital gains for investment partnership contributions to startups and venture companies.

The Investment Partnership Statement submission system, implemented for the first time this year, requires investment partnerships with asset changes after March 14th of the previous year to submit these details and partner lists to the NTS. The deadline for submission is March 31st of this year, and for the inaugural year of implementation, no penalties will be imposed for non-submission.

The NTS has been holding briefing sessions with related organizations, including the Korea Venture Capital Association, since February. Manuals for submitting Investment Partnership Statements are being distributed via social media and relevant association websites. The collected data is planned to be utilized for an 'Investment Partnership Income Deduction Reporting Assistance Service' during year-end tax settlement and comprehensive income tax filing periods.