[2022 National Audit] "Incheon Airport, 30 Billion Won in Property and Comprehensive Real Estate Taxes"

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Hyun-seok] It has been revealed that the real estate holding taxes (property tax and comprehensive real estate tax) imposed on Incheon International Airport Corporation and Korea Airports Corporation have more than doubled over the past five years.

According to data submitted by Incheon International Airport Corporation to Yoo Kyung-jun, a member of the National Assembly Land, Infrastructure and Transport Committee from the People Power Party, the property tax imposed on the corporation last year was 25.2 billion KRW, and the comprehensive real estate tax was 5.4 billion KRW, making the total holding tax 30.6 billion KRW.

The real estate holding tax paid by the corporation increased 2.4 times from 13 billion KRW in 2016 over five years. After soaring to 25.4 billion KRW in 2017, it increased by 1.1 to 1.7 billion KRW annually.

The holding tax paid by Korea Airports Corporation also increased 2.3 times from 7.5 billion KRW in 2016 to 17.1 billion KRW last year.

Incheon International Airport Corporation estimated that if this trend continues, the amount of holding tax paid will exceed 100 billion KRW by 2028. It forecasted that the comprehensive real estate tax would sharply increase from 5.4 billion KRW last year to 12.8 billion KRW this year after the government’s two-year deferral benefit for separate taxation of property tax, which was granted in 2020 considering the economic downturn caused by COVID-19, ends.

Among the lands held by Incheon International Airport Corporation, separate taxation has been applied to areas such as the International Business District, Airport New Town, logistics complexes, and commercial reservoirs, which are subject to lower tax rates than general land and are excluded from comprehensive real estate tax. If these lands become subject to aggregate taxation, the land property tax rate will rise from 0.24% to 0.48% of the official land price, and the comprehensive real estate tax will be imposed, increasing the tax burden.

The corporation projected that it will pay 40.9 billion KRW in holding taxes including comprehensive real estate tax this year, and that the amount will increase by more than 10 billion KRW annually thereafter, reaching 51.9 billion KRW in 2023 and 63.8 billion KRW in 2024.

With the comprehensive real estate tax rising sharply, it is expected to surpass the property tax in 2025 and reach 103 billion KRW (43.9 billion KRW in property tax and 56.4 billion KRW in comprehensive real estate tax) in real estate holding taxes by 2028.

Although Incheon International Airport Corporation posted an annual net profit in the trillion KRW range, it suffered losses of 422.9 billion KRW in 2020 and 750.6 billion KRW last year due to a sharp decline in air travel demand caused by COVID-19.

The debt ratio also increased from 32.03% in 2019, just before the impact of COVID-19, to 69.8% last year. Assemblyman Yoo Kyung-jun pointed out, "The increase in official land prices and the comprehensive real estate tax bomb under the Moon Jae-in administration are adversely affecting the management conditions of airport corporations," and urged, "Tax system reforms should be undertaken to normalize airport management."