Gyeonggi Province conducted a planned investigation into the investment status of high-amount tax delinquents in financial trust products and uncovered trust assets worth 710.4 billion KRW belonging to 975 delinquents investing in monetary trusts and property trusts. As a result, 1.403 billion KRW of delinquent taxes were seized, and 760 million KRW was collected.
Financial trust products are financial instruments where the trustor (customer) entrusts money or non-monetary assets (monetary claims, securities, etc.) to a financial institution licensed for trust business. The financial institution then invests in targets designated (or delegated) by the customer and returns the principal and profits to the customer.
Gyeonggi Province planned this investigation for the first time in Korea, based on the insight that although trust assets are protected from compulsory execution under the Trust Act, ownership under the trust contract converts to the beneficiary’s rights, i.e., trust beneficiary rights, making delinquent tax disposition possible.
The investigation was conducted from late February to early May, targeting 30,000 high-amount tax delinquents in the province with local taxes of 10 million KRW or more. It examined the contract and beneficiary rights status of financial trust products invested in 45 integrated trust companies including domestic (and foreign) banks, securities firms, and insurance companies.
The investigation uncovered trust assets worth 710.4 billion KRW belonging to 975 delinquents investing in monetary and property trusts. Among these, 43.6 billion KRW in monetary trusts and other assets with effective seizure potential were targeted, resulting in the seizure of 1.403 billion KRW in delinquent taxes and collection of 760 million KRW.
Ryu Young-yong, Director of the Tax Justice Division of Gyeonggi Province, stated, "As the financial market diversifies, the concealment methods for evading delinquent tax disposition by delinquents are becoming increasingly sophisticated. Gyeonggi Province will lead efforts to enhance the value of tax equity and foster a social atmosphere of fairness by vigorously collecting from malicious tax evaders, supporting honest taxpayers who fulfill their tax obligations even amid economic recession."
Gyeonggi Province plans to continue building a close cooperation system with the 31 cities and counties within the province to enhance work efficiency and develop various new collection techniques, thereby creating a leading and proactive model of delinquent tax administration.
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