40% of High-Value Tax Litigation and Appeals Lost... Returned Taxes Amount to 1 Trillion Won

[Asia Economy Reporter Kwangho Lee] It has been revealed that the government loses about 4 out of 10 high-value tax lawsuits and appeals exceeding 10 billion KRW. The amount of refunded taxes reaches between 1 to 2 trillion KRW annually.

According to data received by Yoo Kyung-jun, a member of the People Power Party on the National Assembly's Planning and Finance Committee, from the National Tax Service on the 11th, the number and amount of tax lawsuits and appeals are increasing, mainly focusing on high-value taxation cases exceeding 5 billion KRW.

Last year, the number of tax lawsuits recorded was 1,634 cases. Considering that the number of tax lawsuits was 1,484 in 2016, 1,466 in 2017, and 1,543 in 2018, it has been increasing every year. The scale of lawsuit amounts is rising at an even steeper rate.

Last year's lawsuit amount reached 4.6631 trillion KRW, nearly double the 2.4959 trillion KRW recorded three years earlier in 2016. This is largely due to the increase in high-value lawsuits exceeding 5 billion KRW.

Last year, there were 130 high-value lawsuits exceeding 5 billion KRW, a 71% increase compared to 76 cases in 2016. The lawsuit amount rose to 3.7646 trillion KRW, more than double the 1.8168 trillion KRW in 2016.

Tax appeals also show an increasing trend in the over 5 billion KRW category.

Tax lawsuits are the final procedure taxpayers take to contest imposed taxes. Taxpayers can go through pre-assessment review, objection, and review request procedures with the National Tax Service, and appeal procedures with the Tax Tribunal. After going through review or appeal requests, administrative lawsuits can be filed.

As cases of contesting taxation increase, the government loses about 4 out of 10 lawsuits and appeals, mainly in high-value cases.

Last year, the government's loss rate in tax lawsuits exceeding 10 billion KRW reached 41.0%. The loss rate in tax appeals under the same criteria was 41.6%.

Specifically, the loss rates for tax lawsuits and appeals in the 5 billion to 10 billion KRW range were somewhat lower at 34.4% and 31.9%, respectively, while in the 1 billion to 5 billion KRW range, they recorded 20.3% and 40.5%.

The amount of taxes refunded by the government through objection requests, review requests, appeal requests, administrative lawsuits, and Board of Audit and Inspection review requests reached 1.177 trillion KRW last year.

The government spent nearly 10 billion KRW last year to conduct tax lawsuits. Attorney fees amounted to 6.3 billion KRW, and costs from lost lawsuits were 3.4 billion KRW. Since 2016, the government has been spending around 10 billion KRW annually.

Representative Yoo stated, "We need to consider whether the effectiveness of the currently implemented pre-verification system is insufficient," and added, "The tax authorities must devise measures to restore trust in taxation."

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