Total 1.4 Trillion Won in Property Paid Instead of Taxes but Not Sold

"Thorough Valuation and Selective Approval Required for Property Payment Subjects"

[Sejong=Asia Economy Reporter Kim Hyun-jung] It has been revealed that approximately 1.4395 trillion KRW worth of non-monetary assets received by the state in lieu of taxes have not been sold.

According to data submitted by the Korea Asset Management Corporation to Yang Kyung-sook, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, as of the current holdings, unsold non-monetary assets subject to payment in kind amount to a total of 3,758 cases worth 1.4395 trillion KRW, including 3,414 real estate properties (859.8 billion KRW) and 344 securities items (579.7 billion KRW).

Payment in kind refers to paying taxes with assets other than money, such as real estate or securities. The process includes: ▲taxpayer applies for payment in kind at the tax office ▲tax office chief requests payment in kind directive from the regional tax office chief ▲regional tax office chief directs approval of payment in kind to the tax office chief ▲tax office chief notifies taxpayer of payment in kind approval ▲tax office chief collects payment in kind assets from taxpayer ▲tax office chief issues receipt certificate to taxpayer ▲tax office chief hands over payment in kind assets to Korea Asset Management Corporation ▲reporting payment in kind to the Ministry of Strategy and Finance.

According to the 'Recent 5-Year Real Estate Payment in Kind Status' submitted by the Korea Asset Management Corporation to Representative Yang, the scale of approved payment in kind assets was 205 cases (43.6 billion KRW) in 2016, 91 cases (15.7 billion KRW) in 2017, 129 cases (30.7 billion KRW) in 2018, 94 cases (31.1 billion KRW) in 2019, 242 cases (33.6 billion KRW) in 2020, and 10 cases (8.6 billion KRW) as of February 2021, totaling 771 cases (163.3 billion KRW). Over the past five years, securities payment in kind totaled 92 items (353.9 billion KRW), with 15 cases (79.8 billion KRW) in 2016, 21 cases (59.8 billion KRW) in 2017, 16 cases (46.2 billion KRW) in 2018, 19 cases (89.0 billion KRW) in 2019, 19 cases (64.7 billion KRW) in 2020, and 2 cases (14.4 billion KRW) in 2021.

The profit from sales gains compared to the value of real estate payment in kind over the past five years totaled 24 billion KRW, with sales gains (buildings and land combined) of 1.1 billion KRW in 2016, 3.7 billion KRW in 2017, 2.2 billion KRW in 2018, 6.3 billion KRW in 2019, 9.3 billion KRW in 2020, and 1.4 billion KRW as of February 2021.

The sales procedure for state-owned real estate received as payment in kind is authorized by the Korea Asset Management Corporation and proceeds through ▲receipt of purchase application ▲review and approval of sales based on compliance with sales criteria and appropriateness of sales method ▲appraisal ▲contract signing (private sale or auction) ▲payment of remaining balance ▲delivery of ownership transfer documents. Securities received as payment in kind are valued considering asset value and income value according to Article 44, Paragraph 1 of the Enforcement Decree of the State Property Act, and the sales price is determined through deliberation and resolution by the State Property Policy Deliberation Committee (Securities Subcommittee).

The sales proceeds compared to the value of securities payment in kind over the past five years were -30.6 billion KRW in 2016, -1.0 billion KRW in 2017, 1.1 billion KRW in 2018, 12.7 billion KRW in 2019, and -4.7 billion KRW in 2020.

Representative Yang emphasized, "A selective payment in kind system based on the principle of prioritizing tax revenue should be established, thoroughly analyzing any defects at the time of payment in kind approval and evaluating the value of payment in kind assets so that it can be prioritized in tax revenue." She added, "Currently, the judgment on payment in kind approval is concentrated in the National Tax Service, making it difficult to assess the valuation and appropriateness of payment in kind assets. Since payment in kind assets belong to the state, the payment in kind procedure system should be improved to include in-depth analysis of whether the assets have future utilization value as state property at the time of approval."