Gyeonggi-do Detects 11,000 Cases of Reduced Real Estate Tax Reporting... 32 Billion KRW Reclaimed

Gyeonggi Provincial Government

Gyeonggi Province has uncovered numerous violations of local tax laws, including cases where high-end housing acquisitions were reported at reduced general tax rates to avoid heavy taxation.

From February to November, Gyeonggi Province conducted joint local tax investigations with nine cities and counties, including Gunpo, Suwon, and Yongin. They detected over 11,000 cases of legal violations such as underreporting taxes or improper use of tax-exempt real estate, resulting in the recovery of 32 billion KRW in unpaid taxes, the province announced on the 26th.

Additionally, aggressive delinquent tax collection measures, such as wage and accounts receivable seizures and designation of secondary taxpayers, were implemented against habitual defaulters, recovering approximately 570 million KRW in overdue taxes.

Among the major cases uncovered, taxpayer A built a luxury house by creating a garden around a detached house and reported acquisition tax using the general tax rate to avoid the heavy tax rate. A was found to have excluded the attic area, which is part of the house, from the total house area to evade the luxury housing heavy tax rate, resulting in an additional tax recovery of 110 million KRW. The general acquisition tax rate for newly built houses is 2.8%, but luxury houses are subject to a heavy tax rate five times higher than the general rate.

Corporation B merged with Corporation C and acquired land and buildings owned by C. B was exempted from acquisition tax on the condition that C’s business would continue for a certain period. However, it was discovered that B discontinued C’s business and sold the land and buildings before the stipulated period, leading Gyeonggi Province to recover the initially exempted acquisition tax of 220 million KRW.

Corporation D acquired real estate from former owner Corporation E and reported and paid acquisition tax based on the corporate book value, which was lower than the market standard value. Investigation revealed that the representatives of both companies were father and daughter, and the transaction between related parties unfairly reduced tax liability. Consequently, Gyeonggi Province collected the underreported acquisition tax difference of 650 million KRW.

Ryu Young-yong, Director of the Tax Justice Division of Gyeonggi Province, stated, "Gyeonggi Province and its cities and counties cooperated to establish tax law order and ensure fair taxation. We will enforce meticulous tax administration to prevent tax evasion and omissions, fostering a sound tax culture where taxpayers who pay taxes faithfully are respected."

Through joint local tax investigations with cities and counties, Gyeonggi Province has identified and recovered a total of approximately 76.1 billion KRW in unpaid taxes over the past three years. The province plans to continue joint local tax investigations in collaboration with cities and counties next year as well.

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