Yeongdeungpo-gu, Dormant Corporation Acquisition Tax Evasion Corporations Detected, 2.2 Billion KRW Reclaimed

Supreme Court Victory in '4 Billion KRW Acquisition Tax Imposition Cancellation Lawsuit' Leads to Eradication of Intelligent Tax Evasion and Realization of Tax Justice... Tax Investigation Conducted on Corporations Avoiding Higher Tax Rates, Uncovering 2.2 Billion KRW in Evasion
Choi Ho-kwon, Yeongdeungpo District Mayor, "We Will Root Out Intelligent Corporate Tax Obligation Evasion Such as Formal Headquarters Registration and Acquisition of Dormant Corporations"

Tax Audit Site

Yeongdeungpo-gu (District Mayor Choi Ho-kwon) has taken the lead in eradicating corporations' intelligent tax evasion and realizing tax justice by winning a lawsuit to cancel the imposition of acquisition tax last December.

Corporation A acquired Corporation B to avoid the heavy tax rate (8%), changed its business to real estate development, and acquired real estate. The district judged that B was a dormant corporation and applied the acquisition tax heavy rate. Corporation A filed a 'lawsuit to cancel the imposition of acquisition tax' against the district, but Yeongdeungpo-gu ultimately won the case.

In this way, the district is making every effort to manage local tax evasion and omitted tax sources. Previously, through various taxation data and on-site investigations, the district achieved the discovery of 2.2 billion KRW worth of evaded tax sources in the first quarter through intensive tax audits.

According to the Local Tax Act, corporations established within a metropolitan city for less than five years are subject to a heavy tax rate when acquiring real estate. However, intelligent evasion acts such as acquiring dormant corporations or formally registering the head office location outside the metropolitan area to avoid the heavy tax rate frequently occur.

Over the past three months, the district conducted focused tax audits on corporations suspected of evading the application of the acquisition tax heavy rate. The investigation was based on taxation data such as registration license tax, National Tax Service filing data, court registration data, business performance, salary and rent payment details. As a result, tax audits including on-site investigations, inquiries, business visits, interviews with executives and employees, and analysis of acquired real estate were conducted on a total of 144 corporations: 142 corporations subject to head office and branch relocation investigations and 2 corporations suspected of acquiring dormant corporations.

As a result, acquisition tax was additionally imposed in 52 cases on a total of 7 corporations, including 6 corporations that relocated their head office or established branches in the acquired real estate within five years and 1 corporation that acquired a dormant corporation. The total additional tax amount reached 2.2 billion KRW.

The district plans to conduct meticulous and accurate investigations on corporations that evaded taxes through intentional and malicious methods and to thoroughly manage tax sources. Furthermore, the district plans to secure tax fairness and sound local finances through continuous tax audits, ensuring that this special tax audit is not a one-time event.

Choi Ho-kwon, Mayor of Yeongdeungpo-gu, stated, “Taking this investigation as an opportunity, we will strive to eradicate intelligent evasion acts and realize fair tax justice so that many sincere taxpayers do not feel relative deprivation,” and added, “We will enforce strict tax audits and compulsory collection without exception against malicious tax delinquents such as evasion and concealment.”