Jung-gu Seoul Recovers 11.2 Billion Won in Corporate Acquisition Tax Evasion Crackdown

First Local Government to Link Data with National Tax Service
Detection of Dormant Corporations Evading Increased Tax Rates

On May 21, Jung-gu District in Seoul announced that it had conducted a thorough tax audit to counter increasingly sophisticated corporate tax evasion schemes, resulting in the collection of a total of 11.2 billion won in back taxes.

Exterior view of Jung-gu Office in Seoul. Provided by Jung-gu.

Since the beginning of this year, Jung-gu has been aggressively implementing measures to uncover hidden tax sources, focusing its investigations on corporations suspected of tax evasion among those acquiring high-value real estate. The district attributes its success to a detailed analysis of various tax evasion techniques and the adoption of field-oriented investigative methods.

Notably, Jung-gu became the first local government in the country to use data from the National Tax Service to specifically target schemes that evade increased acquisition tax rates through the "acquisition of dormant corporations." Under current law, if a corporation in a major city acquires real estate within five years of its establishment, a higher tax rate applies. However, some companies circumvented this by acquiring dormant corporations to disguise the length of their establishment. By thoroughly analyzing stock transfer data from the National Tax Service, the district detected this method and imposed 1.3 billion won in acquisition taxes on a construction company.

The district also conducted a rigorous investigation into cases of tax avoidance through "false registration of corporate headquarters outside major cities." In one instance, a corporation registered its headquarters at a relative's residence in the outskirts, even though actual operations and decision-making took place in Jung-gu. A field investigation uncovered this, leading to the collection of 900 million won in back taxes. Additional cases of false headquarters registration and similar tax evasion schemes were detected, resulting in the recovery of 5.8 billion won in taxes.

The legitimacy of acquisition tax reductions granted on the condition of land donation was also closely scrutinized. One corporation reported a 100% acquisition tax exemption on the condition of a land donation, but the investigation revealed that it had received public land free of charge. The district announced plans to impose a 50% tax rate on the previously exempted acquisition tax, totaling 2.8 billion won.

In addition, the district identified various other tax evasion cases, including omissions of indirect costs in acquisition tax filings and violations of reduction conditions during post-management periods, and collected the omitted taxes. In the first quarter of this year, Jung-gu achieved its highest real estate acquisition tax collection in the past three years, recording 102.2 billion won.

Kim Gilseong, head of Jung-gu District Office, stated, "This achievement is the result of precise analysis combined with field-oriented tax audit capabilities. We will continue to respond firmly to malicious tax evasion and do our utmost to uphold tax justice so that honest taxpayers are not disadvantaged."

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