Gyeonggi-do Uncovers 7 Cases Including Concealing Major Shareholders and Acquisition Tax Reduction Schemes

Gyeonggi Provincial Government

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province announced on the 8th that it investigated 72 local tax violation cases last year, reporting 6 individuals to the police and imposing fines on 1 person.

Unlike general tax audits aimed at tax collection, violation case investigations are judicial in nature, conducted to report clear legal violations such as tax evasion and asset concealment to investigative agencies for the purpose of applying penalties such as fines or imprisonment.

Gyeonggi Province has formed a dedicated task force for violation case investigations and conducts investigations annually to establish tax justice and enhance fairness in tax burden.

Among the major detected cases, Corporation A, which had a large amount of local tax arrears, was found to have falsely reported shareholder status by making the relationship between shareholders who are relatives appear as unrelated parties. This was a scheme to evade secondary tax liability on arrears amounting to hundreds of millions of won by hiding the fact of being a major shareholder. Gyeonggi Province reported the major shareholders of Corporation A to investigative agencies.

Under the Local Tax Basic Act, a "major shareholder" refers to "persons whose combined ownership of shares with a single shareholder and their relatives or special related parties exceeds 50 percent of the total issued shares of the corporation."

Major shareholders bear secondary tax liability for the corporation's arrears.

Tax defaulter Mr. B was reported to investigative agencies for evading forced execution by tax authorities by registering the closure of his own business and then renting a business license under another person's name for use, an act of name lending aimed at avoiding forced execution.

Tax defaulter Mr. C was found to have fraudulently received acquisition tax reductions by submitting false acquisition tax reduction applications and real estate usage plans when acquiring a knowledge industry center, as well as registering a business license under false pretenses, and was ordered to pay a fine on charges of local tax evasion.

A fine order is imposed before reporting to investigative agencies when the subject has the ability to comply or there is no risk of flight or evidence destruction. It stipulates penalties of imprisonment for up to two years or fines equivalent to twice the amount of evaded taxes, and non-compliance with the order results in immediate reporting.

In addition to reporting and fine orders, the province encouraged voluntary payment during the violation case investigation process, collecting approximately 300 million won in additional arrears from 20 individuals.

Ryu Young-yong, Director of the Tax Justice Division of the province, stated, "Violation case investigations are a strong means to inform that those who improperly receive local tax reductions, evade local taxes, or avoid tax collection measures can face criminal penalties," and added, "We will actively respond to local tax evasion through the operation of the dedicated violation case investigation task force."

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