Seoul City Transfers 114.5 Billion KRW of High-Value Tax Delinquency Collection Rights to Autonomous Districts
[Asia Economy Reporter Kiho Sung] Seoul City announced on the 17th that it will take over the collection rights for 9,975 newly occurred high-value tax delinquencies amounting to 114.5 billion KRW from autonomous districts and carry out collection activities. However, cases where lawsuits regarding tax imposition (including objections, appeals, and review requests) are in progress are excluded.
The amount of delinquent taxes newly transferred to Seoul City this year increased by 14.1 billion KRW (14%) from 100.4 billion KRW in the previous year. Among the delinquent taxes, local income tax accounted for the largest share with 98.1 billion KRW (85.7%), followed by acquisition tax at 15.9 billion KRW (13.9%), automobile tax at 0.3 billion KRW (0.3%), and resident tax at 0.2 billion KRW (0.1%).
Of the 114.5 billion KRW in transferred delinquent taxes, 98.1 billion KRW of local income tax is notified to local governments after national tax (income and corporate tax) assessment by the tax office, and is always subordinated to national tax as a lower priority tax claim, making collection difficult.
Seoul City’s 38 Tax Collection Division announced that it will actively utilize new collection techniques (such as seizure of virtual currency and confiscated funds) and conduct investigations into concealed assets through investigations of delinquent taxpayers and their families’ assets abandoned through fraudulent inheritance, pursuing collection activities through tracking investigations. The transfer details by 25 autonomous districts showed Gangnam-gu with 25.6 billion KRW (22.4%), Songpa-gu with 11.2 billion KRW (9.8%), Jung-gu with 9.9 billion KRW (8.6%), and Seocho-gu with 8.6 billion KRW (7.5%) in that order.
In Gangnam-gu and Jung-gu, where many corporations are located, corporate tax delinquencies were largely transferred, while in Gangnam-gu and Songpa-gu, which have large populations and high personal incomes, personal tax delinquencies were largely transferred.
The highest delinquency amount is 7.5 billion KRW, and the responsible investigator is currently investigating the relevant corporation.
Delinquent corporation A, related to virtual currency issuance, has its headquarters abroad, but the jurisdictional tax office has reassessed it as a domestic corporation for corporate tax, and currently, a total of 7.5 billion KRW in local corporate income tax is delinquent. Strong delinquency measures such as credit information registration will be pursued.
Among the delinquent taxpayers newly transferred this year, it was confirmed that there were cases previously collected by the 38 Tax Collection Division.
Despite the difficult collection environment due to COVID-19 in 2022, Seoul City’s 38 Tax Collection Division collected 221.9 billion KRW through specialized collection activities.
Investigations have been expanded from primarily first-tier financial institutions to 4,044 second-tier financial institutions (NongHyup, Livestock Cooperative, Saemaeul Geumgo, Credit Unions), resulting in the seizure of 5.7 billion KRW.
The city sent a prior notice of transfer to delinquent taxpayers on December 29 last year and urged payment by informing them of delinquency measures (seizure, public auction, home search, etc.) and administrative sanctions (travel bans, provision of public record information, etc.) through a notice on January 17 this year.
Han Young-hee, Director of Seoul City’s Finance Bureau, said, “Seoul City will strengthen tracking investigations and focus capabilities to pursue and collect until the end against the sophisticated asset concealment activities of high-value tax delinquents. At the same time, for livelihood-type delinquent taxpayers who have difficulties paying taxes, we will expand a sound tax culture and uphold the value of fairness through meticulous tax administration support.”
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