South Korea's watchdogs will limit their probes and inspections of local and foreign companies next year as the government promotes business-friendly policies to help boost the local economy, officials said Tuesday.

The National Tax Service (NTS) plans to run the advance pricing arrangement (APA) program for foreign companies with less than 50 billion won (US$45 million) in sales, its officials said. The APA is an ahead-of-time agreement between a taxpayer and the taxing authority to specify a pricing method that the taxpayer will apply to its transactions. Companies that adhere to the program would be exempted from regular tax audits for three to five years.

The NTS will also step up its efforts to regulate the underground economy to induce businesses to voluntarily pay taxes instead of launching a crackdown, the officials said.

"The NTS's aim next year is to reduce unnecessary interference in tax matters, but tighten monitoring of businesses suspected of tax evasion," said an NTS official, asking not to be named.

The Financial Supervisory Service (FSS) will more than halve the number of routine comprehensive inspections to 20 from 45 next year so that financial institutions can better focus on business operation and creating revenues.

The FSS said it will instead strengthen its consulting services for companies with managerial problems.

The Fair Trade Commission (FTC) is seeking to trim down on-site inspections and increase benefits for whistle-blowers to strike a balance between economic revitalization and economic democratization, one of the election pledges of President Park Geun-hye. (Yonhap)