Gwangju City Uncovers 114 Agricultural Corporations for Illegal Real Estate Activities

Audit Committee Conducts Special Inspection of 983 Agricultural Corporations
Dissolution Orders Issued to 74 Corporations, Fines Imposed on 40
First Use of Local Tax Data Recognized as Outstanding Case by Ministry of the Interior and Safety

Gwangju City Hall exterior view.

The Gwangju City Audit Committee announced on the 12th that it had uncovered illegal real estate activities by 114 agricultural corporations following a special audit of all 983 local agricultural corporations.

The committee conducted a special audit on the management status of local agricultural corporations from October 14 to November 27 last year. As a result, it identified 114 corporations that either engaged in or were suspected of engaging in real estate business, imposing fines, filing complaints, and issuing dissolution orders.

This audit was conducted in response to continued illegal activities such as real estate speculation, exploiting the fact that agricultural corporations can own farmland, despite the August 2022 amendment to the “Act on Fostering and Supporting Agricultural and Fishery Business Entities,” which focused on recovering profits and prosecuting illegal agricultural corporations.

The committee focused its audit on all agricultural corporations regarding: ▲ illegal farmland transactions and real estate business activities ▲ businesses unrelated to agriculture ▲ unjust tax reductions such as acquisition tax ▲ continued retention of farmland after corporate conversion.

As a result, illegal real estate activities were uncovered in 114 agricultural corporations. Of these, 40 corporations engaged in illegal farmland sales, leasing, and real estate business were fined and imposed with acquisition taxes totaling 10.6 billion KRW. Additionally, dissolution orders and other measures were requested for 74 corporations.

Furthermore, since August 2022, 25 corporations were found to have gained 11.5 billion KRW in capital gains from illegal farmland sales or leases. Of these, five corporations that engaged in real estate business, determined by reviewing direct payment records, sales status, and local tax reductions, were fined approximately 9.6 billion KRW and faced prosecution and dissolution orders. Twenty other corporations were reported to local districts for further investigation and action.

Fifteen agricultural corporations that received tax reductions such as acquisition tax by claiming to use farmland for agricultural purposes but failed to use it accordingly were reported to local districts for collection of approximately 1 billion KRW in back taxes.

Seventy-four corporations suspected of engaging in real estate business before the August 2022 legal amendment, such as trading farmland without sales, were issued dissolution orders. Fourteen parcels of farmland not sold after conversion to general corporations were also reported for disposition.

A agricultural corporation registered in Nam-gu, Gwangju, purchased 12 parcels of farmland in Gwangsan-gu for approximately 4.8 billion KRW in 2020, left them unused for agricultural management, then split them into 15 parcels and sold them for approximately 13.7 billion KRW between 2021 and 2024, making a profit of 8.9 billion KRW through illegal real estate activities. Another agricultural corporation registered in Dong-gu purchased 23 parcels of farmland in Nam-gu for agricultural purposes and received a tax reduction, but left them unused and was notified of a 400 million KRW acquisition tax collection.

This audit result is the first case nationwide of utilizing local tax data in auditing agricultural corporations. The Ministry of the Interior and Safety highly recognized this, selecting it as an excellent case at the “2024 Local Finance Awards Presentation,” awarding the Prime Minister’s Prize and a 200 million KRW local grant incentive.

Audit Committee Chairman Lim Taehyung stated, “Through this investigation, we have not only created an opportunity to eradicate illegal acts by real estate speculators, but also contributed to expanding local financial resources, which is highly significant. We hope this will foster agricultural corporations that are truly dedicated to their original purpose of promoting agriculture.”

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