Seafood Origin and Construction Materials Falsified for Excessive Profits... Embezzled Money Used to Buy Buildings, Yachts, and Imported Cars for Lavish Lifestyle

National Tax Service Launches Tax Investigations on 59 Antisocial Tax Evaders Threatening Public Livelihoods

[Sejong=Asia Economy Reporter Kim Hyunjung] Seafood wholesaler A disguised low-priced imported seafood as 'domestic products' to make excessive profits. The transaction payments were received through employee-named accounts or income was concealed by falsely accounting for labor costs. The embezzled money flowed into irregular gifts, such as purchasing a small rental building under the spouse's name.

Company B, which supplies construction materials to construction and furniture companies, embezzled corporate funds by falsely accounting for high commission payments to relatives as business income. They purchased a luxury yacht worth over 1 billion KRW under the corporation's name for personal use and also treated related expenses as corporate costs. Additionally, the owner’s family used corporate funds for expenses such as equestrian club fees exceeding 100 million KRW, personal litigation costs, and entertainment bar expenditures. They are also suspected of irregularly gifting funds for acquiring a 3 billion KRW apartment in the metropolitan area and related real estate without reporting gift tax.

The National Tax Service (NTS) is launching tax investigations targeting antisocial tax evaders who exploited the COVID-19 crisis to evade income tax or illegally gift assets, and who indulged in luxurious lifestyles by purchasing expensive yachts and supercars.

On the 24th, the NTS announced that it has started intensive tax audits on 59 suspects, including 29 who committed tax evasion through illegal and unfair practices and luxury lifestyles, and 30 who accumulated wealth through irregular means causing harm to ordinary citizens.

This investigation targets 'tax evasion harming the livelihood of the people,' where income surged due to benefits from social phenomena such as the recent COVID-19 resurgence and prolonged social distancing, but the money was embezzled for private gain, ultimately worsening the difficulties of ordinary citizens and small business owners.

To select investigation targets, the NTS first collected and analyzed information on illegal and unfair sectors and those harming ordinary citizens through monitoring economic trends, new industries, media reports, and cooperation with related agencies.

As a result, 29 suspects involved in illegal and unfair tax evasion were included. Representative cases include companies monopolizing local permits for demolition, waste disposal, and aggregate extraction, making excessive profits through illegal subcontracting and unilateral price reductions. Also included were companies violating 'origin and hygiene facility standards' by exploiting the recent surge in interest in healthy food, and interior companies engaging in unfair practices such as poor construction, use of low-cost materials, and contract breaches while enjoying a boom due to COVID-19.

The 30 suspects causing increased harm to ordinary citizens include unregistered lenders charging high interest rates to those who find it difficult to obtain institutional funds, companies distorting distribution and prices of daily necessities such as furniture, home appliances, food, and miscellaneous goods, and unregistered or illegally operated adult game centers hidden in traditional markets and residential areas.

Last year, the NTS conducted planned investigations in three rounds targeting high-income business owners living luxuriously and tax evaders harming ordinary citizens, auditing 214 individuals and recovering 116.5 billion KRW. This year, in February, it recovered 36.5 billion KRW from 61 unfair tax evaders including those involved in irregular gifts, and is currently conducting tax audits on 67 suspects in new and booming sectors since May.

Kim Dong-il, Director of the NTS Investigation Bureau, stated, "During the investigation, we will comprehensively verify irregular gifts by the owner’s family, asset formation processes, lifestyle and consumption patterns, and transactions with related companies. If intentional tax evasion is confirmed, we plan to take strict measures including prosecution under the Tax Crime Punishment Act."