[2020 National Audit] COVID-19 Leads to Record High in National Tax Arrears

[Asia Economy Reporter Kwangho Lee] It is estimated that the novel coronavirus infection (COVID-19) has caused an economic downturn, which has also affected the tax delinquency amounts for individuals and corporations.

According to data submitted by the National Tax Service (NTS) to Kim Ju-young, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, the NTS has been unable to collect more than 7 trillion won in delinquent taxes annually since 2015, with the amount increasing every year since 2016. In the first half of this year alone, delinquent taxes amounted to approximately 8.8703 trillion won.

This figure is close to last year's delinquency amount of 9.2 trillion won, and the total delinquency for this year is expected to reach a record high.

Furthermore, the delinquent corporate tax amount that the NTS failed to collect in the first half of this year reached a record high of 3.5118 trillion won, exceeding last year's delinquency of 3.2388 trillion won by an additional 300 billion won.

Individual tax delinquencies have also been increasing annually: 4.5549 trillion won in 2016, 5.2285 trillion won in 2017, 5.9626 trillion won in 2018, and 6.0456 trillion won in 2019. In the first half of this year alone, individual tax delinquencies amounted to 5.3585 trillion won, and it is expected to set a new record by the end of the year.

The amount of delinquent taxes that the NTS has classified as deferred write-offs (expected losses) has also increased annually since 2016: 8.2766 trillion won in 2016, 7.4782 trillion won in 2017, 7.6478 trillion won in 2018, and 8.4371 trillion won in 2019. In the first half of this year, the deferred write-off amount for delinquent taxes reached 4.1584 trillion won.

Deferred write-off is a term that replaced "loss disposition" in 2013, referring to an administrative action that extinguishes the tax obligation when it is recognized that the imposed tax cannot be collected due to certain reasons.

Looking at the total number of delinquency cases, there were 1,571,365 cases in 2016, 1,786,261 cases in 2017, 2,147,550 cases in 2018, and 2,302,542 cases in 2019, showing a continuous increase in the number of tax delinquency cases that the NTS failed to collect since 2016.

Breaking it down by individuals and corporations, individual cases increased by 37% from 1,299,116 in 2016 to 1,837,245 in 2019, while corporate cases increased by 70% from 272,249 in 2016 to 465,297 in 2019.

Representative Kim said, "Looking at this year's national tax delinquency status, companies and the livelihood economy are facing difficulties due to COVID-19," adding, "Financial support from the government is urgently needed."

He continued, "For malicious and intentional delinquents, thorough eradication is necessary, and continuous efforts by the NTS are required to prevent national tax losses."

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