Diversification of Seoul City's Tax Arrears Collection Methods... 171.8 Billion Won Collected in First Half, Achieving 85.5% of This Year's Target

Seoul City 38 Tax Collection Division - Best Collection Results Among Autonomous Districts in Last 5 Years
First Local Government to Seize Cryptocurrency, Achievements in New Collection Methods Including Promissory Note Investigation and Seizure

[Asia Economy Reporter Lim Cheol-young] Seoul City announced on the 27th that it collected 171.8 billion KRW in overdue taxes in the first half of the year, achieving 85.5% of this year's target of 201 billion KRW. This was an early achievement within the first half and the highest collection amount in the first half over the past five years. The collection rate compared to the target is the highest ever since the 38 Tax Collection Division was established in 2001.

According to Seoul City, as of the end of June, the total amount of overdue taxes collected by the city's 38 Tax Collection Division and 25 autonomous districts was 171.8 billion KRW, an increase of 35.3 billion KRW (25.9%) compared to 136.5 billion KRW in the same period last year. In particular, the 38 Tax Collection Division's collection performance increased by 15.7 billion KRW (79.8%) from 19.6 billion KRW in the same period last year to 35.3 billion KRW.

At the beginning of this year, Seoul City set the overdue tax collection target at 201 billion KRW, the same as the previous year, considering the total overdue city taxes of 654.9 billion KRW and the prolonged COVID-19 disaster situation. A Seoul City official analyzed, "In a situation where face-to-face collection activities are difficult due to COVID-19, proactively discovering and introducing overdue tax collection methods suitable for the untact era and diversifying collection methods led to such results."

So far, Seoul City was the first local government to take seizure actions on virtual currencies (virtual assets) hidden by high-amount tax delinquents, followed by investigations and seizures of high-amount tax delinquents who concealed assets by exchanging cash for cashier's checks. In the first half alone, they collected 1.72807 billion KRW and 2.35614 billion KRW respectively. Recently, they have also actively started seizing intangible property rights such as copyrights and patents.

The major overdue tax collection amounts promoted by Seoul City in the first half are as follows: virtual asset seizure 1.72807 billion KRW, tracking of asset concealment by exchanging cash for cashier's checks 2.35614 billion KRW, overseas travel ban on high-amount tax delinquents over 30 million KRW 885.12 million KRW, home searches and movable property seizures of unscrupulous high-amount tax delinquents 909.19 million KRW, advance notice of public disclosure of high-amount tax delinquents over 10 million KRW 2.89523 billion KRW, joint crackdown on habitual high-amount tax delinquent vehicles with the National Police Agency and autonomous districts 85.12 million KRW, and seizure of court deposits owned by tax delinquents 33.59 million KRW.

Seoul City is conducting stronger overdue tax collection activities than any other year to mark the 20th anniversary of the 38 Tax Collection Division this year. To develop collection techniques for unscrupulous high-amount tax delinquents, a ‘Financial Asset Tracking Task Force (TF) Team’ is operating. They have also opened a KakaoTalk communication channel with the heads of the overdue tax departments of the 25 autonomous districts to share know-how for more effective tax collection.

While the 25 autonomous districts manage and collect city taxes overdue under 10 million KRW, as of the end of June, they are managing 927.9 billion KRW in overdue taxes. Six autonomous districts showed a progress rate of over 100%, in the order of Yeongdeungpo-gu (140.0%), Guro-gu (131.2%), Dongjak-gu (120.7%), Seongbuk-gu (108.9%), Jongno-gu (106.0%), and Yangcheon-gu (102.7%).

Lee Byung-han, Director of Seoul City’s Finance Bureau, said, “Seoul City will relentlessly track and collect the assets of unscrupulous high-amount tax delinquents who have the ability to pay but hide their assets under the names of spouses or children and live in luxury, so that sincere taxpayers do not feel deprived. We will continue to research new overdue tax collection methods in the second half of the year to increase collection effectiveness and contribute to creating a social atmosphere where paying taxes is inevitable.”