'Strict Action Against Tax Evaders Avoiding Penalties Through Business Closure or Relocation'... Gyeonggi-do Identifies 430 Cases

Gyeonggi Provincial Government

Gyeonggi Province has identified 430 delinquent corporations that evaded tax payments by closing, suspending, or relocating their business sites.

Gyeonggi Province announced on the 21st that from April to August, it investigated 87,000 non-tax revenue delinquents with arrears of 500,000 won or more and identified 430 tax-evading businesses (corporations), collecting or seizing 1.24 billion won.

Non-tax revenue refers to local government income sources excluding local taxes, local allocation taxes, and subsidies, including contributions, charges, fines, and penalties.

In the case of non-tax revenue, a significant number of long-term delinquent payers are businesses.

For example, if Corporation B, which operated a business site in City A, closes the site and relocates to nearby City C, it is practically difficult for City A to confirm this and collect the delinquent amount. Many delinquent corporations deliberately avoid paying non-tax revenue by exploiting this point.

Considering this, Gyeonggi Province took measures to collect delinquent amounts by collectively checking and seizing the investment securities of delinquent corporations through six mutual aid associations, including those for fire protection construction, specialized construction, and information and communications.

Investment securities are essential for bidding on construction projects and applying for guarantee securities, typically ranging from tens of millions to hundreds of millions of won. This method leverages the fact that having investment securities is mandatory to continue business operations.

As a result of the inquiry, 430 businesses (corporations) with a total delinquency of 2.2 billion won were identified. When Gyeonggi Province designated the mutual aid associations as third-party debtors and seized the investment securities, 101 of the 430 businesses voluntarily paid or agreed to pay in installments 340 million won of the delinquent amount.

The remaining 239 businesses had investment securities worth 900 million won seized, and for another 90 businesses (1 billion won), seizure was deferred due to ongoing litigation and other reasons.

In a notable case, Company E located in City D had eight fines totaling 32 million won for violations of the Framework Act on the Construction Industry since 2018, but after 200 million won worth of investment securities were seized, the company fully paid the fines by the end of August.

Company F illegally expanded a building in City G and was fined a coercive penalty of 9 million won by the city hall. The company initially avoided payment citing lack of funds, but after 120 million won worth of investment securities from the Specialized Construction Mutual Aid Association were seized, it paid the penalty in a lump sum.

Ryu Young-yong, Director of the Tax Justice Division of Gyeonggi Province, stated, "Some delinquent corporations avoid payment despite having the capacity to pay by exploiting the fact that non-tax revenue collection measures are weaker than tax collection." He added, "We will use various methods to ensure collection of delinquent amounts and establish a fair tax payment culture."

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