Gyeonggi-do Slaps Heavy Penalty on Building Owners Who Underreported Acquisition Tax... 3.5 Billion Won Reclaimed

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province has uncovered a large number of building owners who reduced their acquisition tax payments by underreporting construction costs.

Gyeonggi Province announced on the 20th that from May to July, it conducted a local tax special investigation on 4,139 buildings newly constructed by individuals over the past two years, uncovering 520 legal violations and collecting an additional 3.5 billion KRW in local taxes.

It was revealed that these individuals exploited the system requiring acquisition tax to be paid based on construction costs by underreporting the construction costs lower than the actual amount contracted with the construction companies, thereby reducing their acquisition tax payments.

The types of violations include ▲reporting acquisition tax based on an amount lower than the construction contract amount ▲omitting acquisition tax reporting on contract changes (increases) ▲omitting reporting of acquisition-related costs such as design, supervision fees, and various charges.

In one case, Building Owner A contracted construction with a construction company for 3 billion KRW in Siheung City but reported only 2.2 billion KRW, paying less acquisition tax and was caught, resulting in an additional tax collection of 30 million KRW.

Building Owner B contracted construction for 510 million KRW in Yongin City and later separately increased the contract by 100 million KRW but reported acquisition tax based on the initial contract amount. The province imposed an additional 4 million KRW tax on this owner.

Building Owner C contracted an 800 million KRW construction contract and built a building in Gwangju City but reported acquisition tax based on 470 million KRW. Additionally, they deliberately omitted 4 million KRW of acquisition-related costs (such as water supply charges) and were caught, resulting in a total tax collection of 12 million KRW.

Under the current system, when an individual contracts with a construction company to build a building, the construction cost is recognized as the acquisition price, and acquisition tax is paid based on that amount. If the taxpayer reports less than the payable tax amount by the legal reporting deadline, a 10% underreporting penalty on the underreported tax amount is imposed. Furthermore, if local taxes are not paid by the due date or are underpaid, an additional penalty of 0.025% per day of delay is charged.

Choi Won-sam, Director of the Tax Justice Division of the province, stated, "The purpose of this investigation is to properly inform about acquisition tax reporting regulations for newly constructed buildings and to prevent underreporting and improper omissions. We will continue to investigate real estate with omitted construction payments and rigorously enforce tax justice by conducting criminal investigations for tax evasion in cases of fraud or dishonest acts."

Meanwhile, the province discovered and additionally collected 4 billion KRW in omitted taxes through local tax special investigations in two areas, including "omission of acquisition tax base for individually newly constructed buildings," in the first half of this year.

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