Changwon Special City Cracks Down on Major Shareholders of Unlisted Corporations

Gyeongnam Changwon City Hall. / Photo by Se-ryeong Lee ryeong@

[Asia Economy Yeongnam Reporting Headquarters, Reporter Song Jong-gu] Changwon Special City in Gyeongnam announced on the 19th that it conducted a planned tax investigation on major shareholders of unlisted corporations to prevent tax evasion and omission, resulting in the collection of 2.1 billion KRW in acquisition tax.

This tax investigation targeted 237 corporations whose shareholders of unlisted corporations increased their shareholding ratio to become major shareholders, based on the statement of changes in stock holdings provided by the National Tax Service.

Acquisition tax on major shareholders is imposed because acquiring more than 50% of the shares of an unlisted corporation grants the status to effectively dispose of or manage the corporation’s assets at will, thus being regarded as acquiring the corporation’s property and incurring the obligation to pay acquisition tax.

Taxpayers who qualify as major shareholders must voluntarily report and pay acquisition tax to the city or county office with jurisdiction over the location of the taxable property within 60 days.

By securing related corporate books such as financial statements of corporations with major shareholders, a comprehensive review was conducted through document investigation focusing on ▲whether the major shareholder’s shareholding ratio increased ▲whether there are special relationships among shareholders ▲the status of asset holdings, and whether acquisition tax was voluntarily reported, leading to additional tax collection.

Jo Young-wan, head of the Taxation Division, stated, “We will do our best to enhance tax fairness with sincere taxpayers and realize equitable taxation. We urge those who have become major shareholders by acquiring shares of unlisted corporations to voluntarily report and pay acquisition tax to avoid disadvantages from non-reporting.”

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