Sales of Imported Cars and Home Fitness Equipment Diverted for Supercar and Real Estate Shopping... 'Corona Winners' Caught for Tax Evasion

National Tax Service Conducts Precise Big Data Analysis to Identify Booming Industries
67 Tax Evasion Suspects Detected in Leisure, Hobbies, Non-Face-to-Face, and Health Sectors and Subjected to Tax Investigation

[Sejong=Asia Economy Reporter Kim Hyunjung] Corporation A, which imports and sells high-end foreign cars, manipulated import prices to inflate costs and received vehicle sales payments through nominee accounts under the names of executives and employees, thereby evading cash sales reporting. The owner falsely recorded tens of billions of won as loans from shareholders, and used the embezzled income to purchase more than ten high-end apartments, underreporting capital gains despite earning over 1 billion won in market price differences.

Health equipment seller Corporation B, experiencing a surge in sales due to the recent home training trend, embezzled cash sales by receiving payments through accounts of relatives. They falsely recorded tens of billions of won as loans from the owner's family and funneled corporate funds by repaying these fictitious loans. They also listed relatives who never worked as employees to falsely record high labor costs, thereby underreporting corporate income. With the embezzled corporate funds, they purchased about ten high-priced real estate properties including apartments and commercial buildings in Seoul.

The National Tax Service (NTS) has launched tax investigations into suspected tax evaders in so-called "COVID-19 winners" sectors such as leisure and hobbies, non-face-to-face services, and health, which actually benefited from the COVID-19 pandemic. These suspects are accused of deliberately and actively attempting tax evasion while enjoying a boom during the COVID-19 situation.

On the 25th, the NTS announced that it would begin tax investigations on 67 suspects in the leisure and hobbies (35 people) and non-face-to-face and health (32 people) sectors, after analyzing industry and sectoral changes due to the COVID-19 crisis using internal and external big data and identifying booming sectors.

To select investigation targets, the NTS linked and compared NTIS big data with various external data, deriving booming sectors based on economic trends by industry and sector. Analysis of NTS NTIS big data on value-added tax sales and credit card/cash receipt amounts identified electronics, golf courses, and ophthalmology as booming sectors. Statistics Korea’s online shopping trend statistics showed electronics, sports, leisure, and pet-related industries as booming. A review of national mobility data through domestic portal sites similarly showed pets, golf courses, and dermatology as sectors with increased mobility.

Based on these results, the NTS selected precise investigation targets in ▲leisure and hobbies-related sectors and ▲non-face-to-face and health-related sectors. With the expansion of remote work and preference for outdoor leisure activities due to COVID-19, last year’s import amount in mobility sectors such as imported cars and bicycles increased by 37% compared to the previous year, while leisure and hobby goods like home training and fishing, and golf-related sectors rose by 29.7% and 24.1%, respectively.

Additionally, the import amount in the home cooking industry, including meal kits and packaging containers, increased by 16.8% last year compared to the previous year, while sales in booming medical sectors such as health and diet foods and ophthalmology and dermatology rose by 26.0% and 14.2%, respectively.

The government views these investigation targets as "COVID-19 winners" who enjoyed a boom despite the pandemic and detected active tax evasion attempts to conceal rapidly increased income. The investigation analysis confirmed 35 tax evasion suspects in leisure and hobbies sectors and 32 in non-face-to-face and health sectors.

Beyond the earlier cases, it was found that some golf courses maximized income by raising green fees and various facility usage fees during the boom, while outflowing income through false expense recordings and transferring it to children through illicit means. Among home cooking industry companies, some falsely paid performance bonuses to salespeople or fabricated labor costs through ghost employees to embezzle money and purchased about ten supercars under corporate names, living lavishly. A case was also uncovered where a specialized orthodontic dental clinic omitted non-insurance sales, invested tens of billions of won of profits in virtual assets, and illicitly gifted these to children for use as study abroad funds.

No Jeongseok, Director of the NTS Investigation Bureau, stated, "Although our economy has recently shown signs of recovery, many are still going through difficult times due to the COVID-19 aftermath," adding, "We will precisely analyze economic trends by industry and sector using various types of the latest big data to accurately identify new and booming tax evasion sectors and conduct effective tax investigations."

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