'Real Estate Shopping' Family Found to Evade Taxes and Use Illegal Gift Transfers... Tax Investigation Launched for 374 People

National Tax Service's 'Gaebaljiyeok Real Estate Tax Evasion Special Investigation Team' Launches 3rd Probe
Largest Tax Audit Scale Compared to Previous 1st and 2nd Rounds

[Sejong=Asia Economy Reporter Kim Hyunjung] Component manufacturer A received the sales rights free of charge and as an irregular gift from a special-related corporation operated by his father, and embezzled corporate funds by falsely recording undocumented sales and repaying them. With that money, he acquired real estate worth hundreds of billions of won, including land in development areas.

Manufacturer and seller B established a special-related corporation with his son as the representative and unjustly transferred tens of billions of won in toll fees by inserting it between business partners. In this process, corporate funds were leaked by accounting for labor costs of people who did not work, such as a daughter-in-law raising young children. In addition, even after borrowing the corporation's name to purchase tens of billions of won worth of land in new town development areas, the land was held as vacant land without being used for business purposes.

The National Tax Service (NTS) is launching a high-intensity tax investigation into 374 suspects of real estate tax evasion in large-scale land and other development areas. This is the third investigation following the first (165 people) and second (289 people), and the scale of the investigation is the largest this year.

On the 29th, the NTS announced that after analyzing tax evasion review data notified by the 'Government Joint Special Investigation Headquarters' along with multiple land acquirers in development areas, it identified 374 tax evasion suspects and is launching the third tax investigation.

The main selection types for the investigation targets are ▲225 people suspected of receiving irregular gifts of acquisition funds or omitting income from related businesses during the acquisition process of land, etc. ▲28 corporations that acquired development area real estate unrelated to business with evaded funds ▲28 family members of owners suspected of improperly leaking corporate funds to acquire land for private use ▲42 people including real estate developers, planned real estate companies, agricultural corporations, and brokers suspected of tax evasion in development area real estate transactions ▲51 people suspected of tax evasion based on analysis of suspicious tax evasion data notified during the investigation by the Police Agency's 'Government Joint Special Investigation Headquarters.'

[Image source=Yonhap News]

This investigation targets those who acquired land multiple times in two or more development areas centered on 44 large-scale development areas, those who acquired multiple parcels of land, or families who purchased land per household member as if shopping.

In the future tax investigation process, the flow of funds will be meticulously verified by closely tracking transaction details between financial accounts and confirming information from the Financial Intelligence Unit (FIU) to determine whether the source of acquisition funds originated from reported income or if the funds were concealed evaded income or gifted funds.

In cases where funds flowed in from related corporations or businesses or where loan contracts were made with relatives, suspicions of improper outflow of business funds or fictitious loan contracts will be thoroughly examined, and if necessary, the scope of the investigation will be expanded to check the appropriateness of related declarations for related businesses, corporations, and relatives.

For planned real estate companies, agricultural corporations, real estate brokers, and other corporations suspected of tax evasion in land transactions or acquiring land with evaded funds, the reported details will be verified comprehensively for omissions of income, accounting of fabricated expenses, and improper outflow of funds.

If it is confirmed that taxes were evaded through fraudulent acts such as false evidence, fabrication and receipt of false documents, or use of nominee accounts, the case will be reported under the 'Tax Crime Punishment Act,' and if real estate transaction-related laws such as land name trusts were violated, relevant agencies will be notified.

Previously, during the first and second tax investigations, the NTS targeted cases where income was concealed by receiving false evidence or where land sale profits were hidden in accounts of employees or family members while living a luxurious life. Actual investigation results confirmed many cases where profits from development were enjoyed without paying taxes.

Park Jaehyung, Director of the Asset Taxation Bureau at the NTS, said, "Through the Real Estate Transaction Evasion Response Task Force, we are closely monitoring real estate market trends and strengthening cooperation with related agencies such as the Ministry of Land, Infrastructure and Transport and the Police Agency to meticulously verify tax evasion suspicions," adding, "We will continue to focus administrative power on tax evasion through real estate transactions and respond strictly."

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