Gyeonggi-do Conducts Planned Investigation on Acquisition Tax for Major Shareholders... 4.7 Billion KRW Reclaimed for Non-Reporting and Non-Payment

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province has uncovered a large number of shareholders who became majority shareholders by acquiring more than half of the shares of unlisted corporations but failed to report and pay the related acquisition tax.

From September to November, Gyeonggi Province conducted a planned investigation on acquisition tax for majority shareholders of unlisted corporations targeting 9,666 corporations with majority shareholders in the province, based on data submitted by the National Tax Service. They detected 445 cases of non-payment of acquisition tax and collected approximately 4.7 billion KRW in additional taxes, the province announced on the 9th.

A majority shareholder is defined as a shareholder or a limited partner of an unlisted corporation and their special related persons, including spouses and blood relatives within the sixth degree as specified by presidential decree, whose total shares or capital contributions exceed 50% of the total issued shares or total capital of the corporation. Majority shareholders are deemed to have acquired real estate and other assets of the corporation in proportion to their shareholding and must report and pay acquisition tax within 60 days from the date of acquiring the shares.

In a major case, Mr. A became a majority shareholder of Corporation B but failed to report and pay acquisition tax within 60 days, resulting in the province collecting 194 million KRW in acquisition tax and related charges.

Shareholders such as Company D of Corporation C became majority shareholders in 2020 but did not report or pay acquisition tax. In 2021, their shareholding ratio increased compared to the previous year, increasing the acquisition tax due, but they failed to comply. As a result of this planned investigation by Gyeonggi Province, a total of 383 million KRW in acquisition tax and related charges was collected.

Ryu Young-yong, head of the Tax Justice Division of the province, said, "Acquisition by majority shareholders often goes unnoticed in terms of acquisition tax obligations compared to general acquisitions, which is why we conducted this investigation." He added, "We will actively promote the obligation of unlisted corporations to report and pay acquisition tax to encourage sincere tax payment and prevent tax base omissions through continuous and multifaceted planned investigations."