Pre-NTS Period: 1948 to 1965
After Korea regained its sovereignty from Japanese colonial rule, the finance bureaus of each province took over the levying, collection, and management of local taxes. It was not until March 1948, under the U.S. military government, that the Ministry of Finance (MoF) finally set up the Bureau of Taxes (BoT) to handle tax-related matters nationwide. In addition to the BoT, provincial tax departments were established along with 64 local tax offices. The provincial tax departments later merged and only four remained. The Korean War, however, made it impossible to consolidate and maintain a stable tax system.
After succeeding in the
coup d’état of May 16, the Park Chunghee administration launched its First Five-Year Economic Development Plan in 1962, and began to re-shape and consolidate the tax administration system in order to secure the massive amounts of capital and revenue needed for its industrialization drive. The BoT, part of the MoF, had handled tax administration until then, but it became increasingly necessary, around 1964, to organize a separate body to handle tax collection exclusively. The so-called
Nathan Report from the Economic Advisory Board, released in 1965, also advocated the need for such a body. President Park responded by organizing the Special Task Force for the Investigation of Tax Administration in September 1965, a body charged with reviewing the status of taxation in major industries. The National Tax Service (NTS) finally came into being on March 3, 1966, as a consequence.
<Table 4-1> Chronology of Major Developments in Tax Administration (Pre-NTS)
| Date |
Major developments |
| March 1, 1948 |
-Each province’s BoF handled matters of local taxation in the early days (1943)
-The BoT was established by the MoF in 1948 to handle matters of taxation nationwide
-The BoT accompanied the establishment of tax administrations (in 9 provinces) and tax offices (64) across Korea |
| Aug. 1949 to April 1950 |
-Nine provincial tax administrations were merged into 4, while the number of tax offices increased to 67 |
| June 1950 to 1953 |
-Six new tax offices were set up in an effort to collect more taxes for war efforts |
| July 1954 to Feb. 1959 |
-Eleven new tax offices were established, and 3 existing ones were abolished (for a total of 81 tax offices) |
| Dec. 1956 |
-The tax system was reformed, with greater focus placed on indirect rather than direct taxation, in an effort to gather economic reconstruction capital |
| Dec. 1961 |
-The Act on the Adjustment of National and Local Taxes was enacted to both consolidate statutory grounds for taxation and support a major overhaul of the tax system so that it could better support the First Five-Year Economic Development Plan (1962-1966) |
| May 1962 |
-The Training Academy for Public Officials was set up by the MoF to produce public officials specialized in taxation matters |
| 1965 |
-The Special Task Force for the Investigation of Tax Administration was organized |
Source: Korea Institute of Public Administration. 2008. Korean Public Administration, 1948-2008, Edited by Korea Institute of Public Administration. Pajubookcity: Bobmunsa.
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