"Public Disclosure of New Defaulters? Ineffective" Collection Rate for High-Amount Tax Delinquents Barely 0.02%

Korea Customs Service Publishes Personal Information of 249 High-Amount, Habitual Tax Delinquents
Collection Amount Only 0.02%... Criticized as "Ineffective"

Last year, the identities of individuals who failed to pay large amounts of customs duties or who habitually defaulted were disclosed. The collection performance for these individuals amounted to only 0.02% of the total outstanding amount.

According to data received by Yang Kyung-sook, a member of the Democratic Party of Korea, from the Korea Customs Service on the 2nd, 249 high-amount and habitual defaulters were disclosed last year. The total amount owed reached 1.07 trillion won.

The individual with the largest outstanding amount was a sole proprietor in agricultural product trading who owed a staggering 448.3 billion won. This was due to being caught with high-rate tariff items and additional charges incurred from litigation. This defaulter had recorded the highest amount among disclosed individuals for several years.

The Korea Customs Service discloses the identities of those who have defaulted on customs duties, domestic taxes, and value-added tax under its jurisdiction for more than 200 million won and have remained unpaid for over a year. Defaulters are first notified that they are subject to disclosure and given an opportunity to explain, after which the list is disclosed following deliberation by the Customs Information Committee. This policy aims to encourage voluntary tax payment.

However, as of the end of July this year, the amount collected from high-amount and habitual defaulters was only 190 million won, which is 0.02% of the total outstanding amount. This low effectiveness of identity disclosure has been criticized.

A scene from the OCN drama "38 Sagidongdae," which depicts the story of tax collection officers chasing high-amount tax delinquents.

Looking at the collection performance of high-amount and habitual defaulters over the past five years, it was 0.45% in 2017, 0.16% in 2018, 0.25% in 2019, 0.34% in 2020, and 0.13% in 2021. In 2017, among 192 high-amount and habitual defaulters with a total outstanding amount of 322.4 billion won, the amount collected the following year was 0.45%. Due to the increasing accumulated outstanding amounts each year, the collection rate has never exceeded 0.5%.

The Korea Customs Service imposes administrative sanctions such as requesting travel bans for defaulters and providing defaulter information to credit information agencies in addition to disclosing their names to collect high-amount and habitual defaults.

Furthermore, the agency is pushing for amendments included in last year’s tax reform plan to restrict licensed businesses by limiting permits or requiring cancellation or suspension of existing businesses for defaulters.

Additionally, a system is in place to pay rewards to those who report hidden assets of defaulters, contributing to the collection of outstanding amounts. There is also consideration to lower the minimum threshold for reward payments from 20 million won to 10 million won in collected amounts.

Representative Yang pointed out, “Administrative sanctions against defaulters should be strengthened to raise awareness about irresponsible tax payment.”

She added, “The scope of disclosed high-amount and habitual defaulters should be expanded to those owing more than 100 million won to encourage voluntary tax payment and increase the collection rate of delinquent taxes.”

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