Massive Detection of Social Enterprises Illegally Reducing Property and Acquisition Taxes... 151 Cases in 4 Years

Preventing 'Waste of Taxpayer Money' by Yoon Government
Results of Comprehensive Survey on Social Enterprises

[Asia Economy Reporter Koo Chae-eun] It has been revealed that there were 151 cases amounting to 410 million KRW over the past four years where real estate acquisition tax and property tax exemptions, granted for being recognized as social enterprises, were misused for purposes such as leasing or transfer.

When certified as a small and medium social enterprise, real estate acquired for direct use in core business activities is eligible for a 50% reduction in acquisition tax and a 25% reduction in property tax. However, cases abusing these benefits have been detected. This is the result of an inspection of support projects conducted over four years from 2018 to 2021.

On the 5th, the Government Joint Anti-Corruption Promotion Team under the Office for Government Policy Coordination announced the results of the ‘Social Enterprise Management Inspection.’ This is part of the Yoon Seok-yeol administration’s ‘Strengthening Fiscal Soundness’ policy aimed at preventing wasteful public spending and enhancing transparency and fairness in financial support.

Additionally, there were 86 cases amounting to 120 million KRW where social enterprises failed to pay fines for non-compliance with corrective orders. Cases of duplicate support or receiving inappropriate subsidies were also identified, resulting in the recovery of 130 million KRW in support funds.

Instances of excessive or incorrect payment of support funds for labor costs of 1,006 employees and other financial support projects were also uncovered.

The Office for Government Policy Coordination plans to enhance the Social Enterprise Integrated System to prevent fraudulent receipt of support funds, relax the obligation to submit business reports from twice a year to once a year, and revise the criteria for imposing fines.