Incheon Western Environmental Association "Double Taxation Unfair... Local Tax Act Needs Reconsideration"

[Asia Economy Reporter Moon Hyewon] The Incheon Western Environmental Business Cooperative, which is developing the Incheon Western Resource Circulation Specialized Complex (hereinafter referred to as the Resource Circulation Specialized Complex), has called for a review of the Local Tax Special Cases Restriction Act, arguing that double taxation is unfair.

On the 5th, the cooperative held a press conference at the Korea Federation of SMEs in Yeongdeungpo-gu, Seoul, stating, “After the completion of the Resource Circulation Specialized Complex construction, when individual lot divisions are made to cooperative members, they are placed in a position to pay acquisition and registration taxes again under the Local Tax Act, causing cooperative members to bear an economic burden due to double taxation,” and emphasized, “Active correction of unreasonable tax administration is necessary.”

According to the cooperative, in January 2018, the cooperative purchased land from the port authority in Seo-gu, Incheon, to develop the Resource Circulation Specialized Complex. The purchase price was shared based on the leased area of cooperative members, and a total of approximately 643 million KRW in acquisition and registration taxes was paid. This is because the development of recycling complexes is only possible by small and medium enterprise cooperatives under relevant laws.

On October 31 of the following year, regarding the property tax reassessment based on a Supreme Court precedent, the cooperative, as the project implementer, entered into a real estate trust contract for collateral with financial institutions for loan purposes on behalf of cooperative members to facilitate smooth industrial complex development. Only the ownership was administratively (formally) changed to the trust company, and there was no change in the cooperative’s status as the project implementer.

The cooperative stated, “Through the 2014 amendment of the Local Tax Special Cases Restriction Act, in the case of real estate collateral trusts, the taxpayer is designated as the trustee, and if the trustee is not the industrial complex project implementer, tax reductions and separate taxation are excluded, putting us at risk of reassessment of previously reduced property taxes.”

They added, “The original purpose of the law amendment was a policy measure to prevent tax avoidance or evasion through consignment, and it is not intended to increase the tax burden by excluding tax reductions or separate taxation for industrial complex project implementers. Unless there is an attempt to avoid taxes or receive unfair tax benefits, it is necessary to consider regulations that prevent increased acquisition or property tax burdens or exclusion of reductions due to trust decisions.”

The cooperative previously held a meeting with Kim Gyoheung, a member of the Democratic Party of Korea, on the 4th of this month and proposed amendments to the related laws.

This content was produced with the assistance of AI translation services.