Catching Big Data Tax Evasion... Seocho-gu Discovers Hidden Tax Sources Worth 33.2 Billion Won

Operation of Sewon Discovery TF Uncovered 33.22 Billion KRW in Hidden Taxes Last Year... Analysis Using Big Data on 844,060 Cases, 1:1 Matching Between Tax Items... Discovered 4.833 Billion KRW in Real Estate Sector Including Acquisition Tax

[Asia Economy Reporter Jong-il Park] Seocho-gu operates a task force (TF) utilizing big data on local income tax to establish tax justice and secure finances, successfully uncovering tax bases that are easily evaded or omitted.

Through this effort, it was announced that last year they discovered hidden tax bases amounting to 33.22 billion KRW, contributing to financial expansion.

In particular, local income tax is a local tax levied on the income of individuals and corporations, categorized into corporate income, comprehensive income, capital gains, and special withholding based on income scale. It must be reported to local governments simultaneously with income tax filing.

The district analyzed approximately 844,060 cases of big data, including notifications from the National Tax Service and other local governments on income tax and corporate tax, as well as local income tax and resident tax filing and payment data, to discover tax bases.

Using big data investigation techniques such as cross-verification of taxable data, one-to-one matching, and inter-tax item matching, they conducted focused investigations on data with discrepancies in paid tax amounts, unreported, and underreported cases.

As a result, they identified tax bases totaling 28.369 billion KRW across 36,129 cases, including 8.923 billion KRW from comprehensive income local income tax, 7.116 billion KRW from capital gains, 8.334 billion KRW from corporate income, and 3.996 billion KRW from special withholding.

One case involved the district’s big data investigation technique confirming a match between local income tax and resident tax items for Corporation A. Although resident tax was paid, it was found that local income tax had not been reported or paid. Investigation through the corporation’s website confirmed that since five years ago, the corporation had an office in Seocho-gu with employees working there. This led to the recovery of 200 million KRW in corporate local income tax, uncovering hidden tax bases.

Additionally, in the real estate sector such as acquisition tax, they focused on investigating whether non-taxable or exemption conditions were unmet, whether the property was unused for the intended purpose or sold within the mandatory period, and whether corporate acquisition property price omissions or metropolitan area heavy tax rate omissions occurred, discovering 4.833 billion KRW in tax bases including acquisition tax.

For example, Corporation B acquired real estate worth 9.8 billion KRW and received a 50% reduction on acquisition tax under the condition of direct use for its core business within one year. However, it was confirmed that the property was not directly used for the core business within one year from the acquisition date, leading to the discovery of 319 million KRW in acquisition tax that had been exempted.

Meanwhile, to prevent the spread of COVID-19 and reduce taxpayer difficulties, the district is the first in the nation to implement a mobile “instant text reporting window” that allows easy reporting and payment of personal local income tax capital gains via SNS.

They also operate “license tax reporting and payment” and “local tax refund claims” through an ontact method, eliminating the inconvenience of having to visit the district office.

Lee Deok-haeng, head of the Local Income Tax Division, stated, “While doing our best to expand finances using big data, we will also provide maximum tax support policies such as collection deferral and payment extension stipulated in the Local Tax Act for taxpayers facing difficulties due to economic damage.”