TAXATION IN NORTH KOREA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00810A005800120007-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 21, 2016
• Document Release Date: June 16, 2008
• Sequence Number: 7
• Publication Date: January 21, 1955
• Content Type: REPORT

Approved For Release 2008/06/16: CIA-RDP80-0081 OA005800120007-1
CENTRAL INTELLIGENCE AGENCY
INFORMATION REPORT
CCIQ'I11111111UTIAL
Ills Doatment oontains information affecting the Na-
tMsal Ds(sase of the United States, within the mean-
US of Title 19, Sections 791 and 794, of the U.S. Code, as
smsaSst, no trunse"Won or revelation of its contents
W or reedpt by an unauthorlasd person Is prohibited
by law. The reproduction of this form Is prohibited.
DATE DISTR. 21 January 1955
25X1
NO. OF PAGES I.
RlQ(1EMENT NO. RD
TIN ioURc'! IVMMATIONN NCI MW MM AN NPINIT n.
TIN AN A*M OP CO~ 0$ TOIITANIM.
(FOR ON W ANMI)
1. In North Korea a statement of the village tax quotas to be collected from indivi-
duals is sent from the central gowwomient to the province, from there to the 25X1
county and on to the village. The village attempts to usess each individual
a sufficient amount so that the total collected in the village will equal the
government quota. If the amount collected in the village does not most the
quota because of decreased crop yields or improper assessments, the matter is
referred to the county and province authorities who then assign teams to
investigate the situation. Invariably, the village leaderr are told to collect
enough to equal the government quota. Tx defaulters are listed by name on a
bulletin board in each market. Several people are selected from among the
local businessmen to urge each merchant to pay his full taxes. If they are
successful in seeing that the taxes are paid, the county People's Committee
chairman sends them a letter of appreciation. If unregistered merchants are
discovered conducting business, the Finance Section of the county People's
Committee imposes taxes on the amoamt of goods in the possession of the mer-
chants. Taxes on merchants are usuaall.y heavier than those imposed on farmers
even though his food consumption allUNanoe and sate other expenses are deducted
from his total sales figures in calculating his local self-government tax.
2. Farmers pay 27 percent of their rice crop and generally 23 percent of their
other crops as taxes-in-kind. Their 6 percent irrigation tax is also paid with
grain. No taxes-in-kind are paid for the first three years on newly exploited
land as it is usually burned off and tilled for three years under government
supervision. In the fourth year, ten percent of each crop is levied as.taxes-
in-kind. If a farmer fails to pay the full anaunt of his tax-in-kind by a
specified date, a fine of five percent per month of the full amount of the
tax is levied, so that if he awed 200 kilo~rar of potatoes and paid only 150
kilograms on the due date, his debt would be 60 kilograms the following month
since five percent of the 200 kilograms is added to the unpaid 50 kilograms.
The village People's Committee appoints an inspection committee to make a
preliminary inspection of the taxes-in-kind paid by each farmer before the
COI0 lllIA'TIAL
STATE ARMY ? NAVY Y AIR , I POO I AEC
25X1
n
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CONFIINTIAL
_ 2 -
grain is sent to the county People's Committee, where it is again inspected by
permanent inspection teams and then stored in the county warehouse.
3. Monetary taxes paid by farmers ineludb the local self-government Tax which is
imposed upon each family at t W t'*te of i to I percefl t 'bf the total yearly
income, and paid quarterly. The x'atd fifes it readjustmehts have to be made
to meet government quotas :. A Vehio al`Ta*, cff too-hmdred 4bn Is paid yearly
for each cart, whetber clerk Ok -horse . '.#inis ~rnon"-pent of the Local
Self-government and the Vehio Partes ttistt 'to one` pet+leth11 a day af the unpaid
amount. Both these taxes are collected by the village People's Committee and
sent by bank channels to tbb cl ty lE a Cod mittee . The ?tea' , Union
Fee is levied at the rate of ?t&ree 'VO!t monthly tiara i aisle member Or' a family.
The Korean-Soviet Association Feeeithfd to ' ftrfbt bns e`t portars Asso-
ciation Fee are both levied at':*he rate t r twO'wo!t' for each male member
of a family. The liatic l Detente- dltpp tare A$rsocia'~io>!r 'tie is levied aty the
rate of t1ree to five won monthly =Tbt ~I+aeh~ a ?a~ar 'of `latter
4. In calculating ? the taxes+in i fttid' and thee- se gOtii Geht tax for the average
farmer, crops-are divided Late twohc$tef lea` 1or'cro such Cs rice, millet,
and barnyard millet, and minor erbpi; iiiii'iis 3tatbes r"6 at s anti other vegetables.
Although taxes -inokind are let ie con a11' elh , iii : farmer may' ply his major
crop taxes-in-kind vitk only oai'4W ithO treef'typos ~ 'min if he desires, as
the tax rate of 27 paroat t$etke leis t6r.r41 thMi . 'He``ma ? do the dame with
his, minor crops, but,Wy,4iot euhetK*te -a loi`'er ?o `4_m , or crop.
5. In calculating the selfag evainsit ~dl~'!oF?ii a tt"famt3.y=o~' ' s peopYe,
consideration is given *ta-6Zdh 0ele a$A16t& ski Of cfepi -hatwstedj ..
taxes?iaaeind ? in k1l.ogro f' 'YiA e~tlt o'. Wtieh includes items
such as food ;aotl-d'~ he31' , ohsred ilaer 1l a
seed alletiranae ads #h t$ kit se' f ObA' ~'of i i d rf a !odder
allowance; a food so beet allowance of 600 grams (300 in major crops and
300 in minor) daily for each maziber of a family.
6. A balanced imo 2 Olt' oft SW 'id kflb i s is ?i `ed'by 'Odgaftd'g from
the total crop harvested, the lOk@9-ia-ki5md#~ ` iri expftses, +KO seed
allowance, the fodder allowance, and the food consun allowance. Based
on official wok; 3KIps rates, A U bit "044 b' incomes is then con-
verted into a won figure. In August 1954 the official prices used for the
conversion were,= Irox3~Lt > 'Tor and kf b sm of rice, 40 for millet,
20 for potatoes, 30 ki beans 'lad-3a"3 4bther vegetables. In order to
calculate the farmer's quarterly income for self-government tax purposes, the
fodder allowance and the food co} a~1,w"cca Ida also converted into a
won equivalent. In August the pt'fce..'e valents for these two allowances
as set by the government were ,,-.ps4or a kilogram.of rice, 9 for millet, 10
for potatoes, 8 for beans, and'5 for other vegetables. The farmer's adjusted
quarterly income is then computelby totalling the $1tL.equivalents of the
balanced crop income and of the i fdtider and food allbicegr.. he farmer may
then be assessed 2.2 percent ot`'h s,quarterly inccmta f, r the local self-government
tax. (See attachment for chart shoving how a five-Member farm family which had
harvested 5,310 kilograms would be assessed).
7. The farmer usually tries, to subtract all his allowances from his major crop
yield since the tax rate on major crops is higher than on minor crops. He
thus lessens his self-government tax considerably. This is allowed by the
village People's Committee and the tax assessors, provided the total of the
taxes from the village equal the government quota. If the village taxes fall
short, the Committee readjusts the farmer's deductions and thus increases the
self-government tax to equal the quota.
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CONFIDENTIAL
8. For tax purposes,, the tax inspectors and crop estimators mu1*p4-
y the average
yield of the previous year by the amount of planted land in p'yon'g in the
present year in order to estimate the total year's harvest for assessment
purposes. In the case used in the attac?hed table, the farmer who planted
rice on 3,000 p'yorig of land averaged in the previous year one kilogram of
rice per p'yong, yard 500 grams of millet, 400 grams of barnyar"d?millet, 5
kilograms of .potatoes, 300 grams of beans, and 6 kilograms of vegetables.
.Merchants,, such as peddlers and shopkeepers, pay a commercialitax levied on
their profits Profit is regarded as two, to three percent of,monthly sales.
The tax is figured quarterly. Each merchant must keep dailyaccount books
which are and&ited~quarterly by the Finance Section of the co, ty People's
Committee. Tex adjustment on a quarterly basis is accomplisahed by the Finance
Section at the same time. The merchant pays his commercial tax each month for
an earlier monthh, i.e. in April he pays the tax for January, in May he pays
February's tax. He also pays a local self-government. tax which Includes land,
education, and bbui&lding taxes.. A merchant who retails 30, 0001 won worth of
goods in a month would pay about '3,11.00 won as his commercial tax and about
1, 000 won as self -;government tax. A saalar`ie d. employee of a government
organization is d'asess.ed a, certain amount of his salary as the self-government
tax and in addi=tion pays one percent of his salary for sociallirnts~urance and
general"ly one, percent- of his salary monthly for each asjsociation or group to
which he belongs. He pays three percent of his salary month to the local
branch-, of the Labor Party as his ,b`abor ;Party fee. If a farms has living with
him a son who is a~salaried employee, ee~ch must pay his self government tax
independently. With regard to the une_yyloyed and to free laborers, since each
member of a family ?presumably cos sumes 00 grams of food dai regardless of
income., a percentage is levied upon the total food consutgr of the family
for the s?olf-gove nt tax.
1. The allowance is based on a rate of 17 kilograms for
1, ;11M p"y? gn obi rice paddy and 13 kilograms for 1,000 p'yorig of minor
,.C_ o ,. One p'yong is equal to 3.95 square yards.
2. L-Clonment'i By "balanced amount" of crop income, probably
means s net `tgklance" of crop income .
CONFIDENTIAL
Approved For Release 2008/06/16: CIA-RDP80-0081 OA005800120007-1 ,
 Approved For Release 2008/06/16: CIA-RDP80-0081 OA005800120007-1
Self-Government Tax for Farm Family of Five People
Rice
Millet
Millet
Potatoes
Bean
Vegetables Total
Total crop harvest
3,000
250
400
1,000
60
600
5,310 Kg
in kilograms (Kg)
a. Taxes-in-kind
990
56
92
230
14
138
1,520 Kg
b. Farm expense
allowance
51
39
90 Kg
c. Seed allowance
90
1
5
100
14
2
212 Kg
d. Remainder, after
subtracting a, b,
and c from total
harvest
1,869
193
303 1
631
32
460
3,488 Kg
e. Fodder allowance
33
27
6o Kg
f. Food allowance
540
193
347
1,080 Kg
g. Official price
for a and f
5,940
1,746
3,740
11,426 won
h. Balanced crop
income (d minus
a and f)
1,296
303
257
32
460
2048 Kg
i. Official price
for balanced
income
71,280
9,090
5,140
960
4,60o
91,070 won
J. Total yearly
income (g end 3)
102,496 won
k. Quarterly income
25,624 won
1. Quarterly self-
government tax
563.73 won
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