Gyeonggi-do Cracks Down on 130 'Meoktoe Construction Companies' Closing Sites Immediately After Construction to Avoid Taxes

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province has uncovered 130 'eat-and-run' delinquent corporations that exploited the timing of non-tax revenue imposition, such as construction business law fines, which occur after the completion of construction work, by closing their business sites immediately after the project to evade tax payments.

From April to August, Gyeonggi Province investigated 10,801 construction-related corporations that had overdue non-tax revenues of 500,000 KRW or more, and identified 130 corporations involved in such eat-and-run activities, collecting or seizing 1.5 billion KRW, the province announced on the 1st.

Due to the nature of the construction industry, most non-tax revenues are imposed upon the completion of construction work, making collection difficult if companies close their business sites immediately after the project.

For example, if Construction Company A conducted Housing Project B in Suwon City and was fined penalties and surcharges, if Company A closes its business site established in Suwon immediately after Project B, the collection process becomes complicated as authorities must track Company A’s business sites in other municipalities.

Accordingly, to secure the public interest in the construction industry, the province utilized the Construction Industry Knowledge Information System 'KISCON' managed by the Ministry of Land, Infrastructure and Transport.

KISCON registers all construction companies’ public and private projects over 100 million KRW, including project names, contract details, subcontractors, construction performance, and payment status. Even if a business site is closed immediately after the project, the KISCON system allows verification of construction records, making it easy to identify investigation targets.

Through this, the province identified 130 corporations with a total of 2.7 billion KRW in arrears and encouraged voluntary payment by notifying them of the seizure of construction payments.

As a result, 77 of the 130 corporations voluntarily paid or agreed to pay in installments 900 million KRW of the arrears. The remaining 33 corporations had 600 million KRW of construction payments seized, and another 23 corporations (1.2 billion KRW) were on hold due to lawsuits and other reasons.

In a major case, Company C based in Seoul had overdue metropolitan transportation facility charges of 35 million KRW for over 10 years after conducting construction in the province in 2012. Gyeonggi Province confirmed through KISCON that Company C is currently conducting construction in another metropolitan municipality and notified the seizure of 2.2 billion KRW in construction payments. Company C immediately paid the full 35 million KRW arrears.

Company D had not paid 9.3 million KRW in building law enforcement fines imposed over several years. Upon notification of the seizure of 300 million KRW in payments for a waterworks project by Gyeonggi Province during this investigation, Company D immediately paid 4.3 million KRW and agreed to pay the remaining balance in installments.

Ryu Young-yong, Director of the Tax Justice Division of the province, stated, "Some delinquent corporations exploit the fact that non-tax revenue collection measures are weaker than tax collection and evade payment despite having the ability to pay. We will ensure collection of arrears through various methods to establish a fair tax payment culture."

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