Gyeonggi-do Seizes 1.13 Billion KRW Through Comprehensive Survey of Mutual Aid Association Investment Securities

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province has achieved the seizure of 1.13 billion KRW through a full investigation of investment securities in mutual aid associations held by corporations delinquent in local taxes.

Gyeonggi Province announced on the 12th that it conducted a full investigation of investment securities in four mutual aid associations, including the Electrical Construction Mutual Aid Association, and identified 1.42 billion KRW in investment funds held by 16 delinquent corporations, seizing 1.13 billion KRW from 12 cases.

Since mid-March, the province has conducted a full investigation into whether about 18,000 corporations with local tax delinquencies exceeding 5 million KRW own investment securities in mutual aid associations. The investigation was carried out through the headquarters of four mutual aid associations: Electrical Construction, Information and Communications, Capital Goods, and Engineering.

Businesses such as electrical construction companies are required by related laws, including the Electric Utility Act, to invest in the relevant mutual aid associations for bid guarantees, contract guarantees, and construction performance guarantees.

While investment securities of the Construction Mutual Aid Association have been managed through the existing local tax information system, investment securities of the Electrical Construction, Information and Communications, Capital Goods, and Mechanical Equipment Construction Mutual Aid Associations, which were subject to this investigation, had been excluded from management until now.

This is the first full investigation of investment securities in mutual aid associations such as Electrical Construction in Korea. The province explained that the investigation was promoted to eliminate blind spots in the investigation of hidden assets of delinquent taxpayers.

In one case, a delinquent corporation A engaged in electrical construction in the province, which had no assets and was insolvent, was delinquent on 74 million KRW in local income tax imposed in 2015. The province confirmed that corporation A held 70 million KRW in investment securities in the Electrical Construction Mutual Aid Association and took seizure action.

Delinquent corporation B failed to pay 26.6 million KRW in 11 cases, including local income tax (corporate tax portion) imposed in 2021. Upon discovery of 70 million KRW in investment funds in the Electrical Construction Mutual Aid Association during this investigation and notification of seizure, B agreed to pay in five installments and paid 5 million KRW. Corporation C, also engaged in electrical construction, was delinquent on 7.2 million KRW in 20 cases of local income tax imposed in 2020. When 70 million KRW in investment funds was discovered and seizure was notified, C immediately paid the full amount.

The province and city/county governments plan to request the transfer of securities and public auction through the Korea Asset Management Corporation to proceed with collection procedures for the 12 delinquent corporations whose investment securities were seized.

A provincial official emphasized, "The methods of payment evasion and asset concealment by chronic delinquent taxpayers are becoming more diverse," adding, "We will do our best to eliminate blind spots in hidden asset investigations and discover new collection techniques to realize tax justice."

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