Gyeonggi-do Recovers 3 Billion KRW Through Planned Investigation of Tax Base Omissions in New Buildings

Gyeonggi Provincial Government

Gyeonggi Province collected 3 billion KRW through a planned investigation into omitted tax bases.

Gyeonggi Province announced on the 24th that from February to May, it conducted a planned investigation into omitted tax bases for buildings newly constructed by individuals, uncovering 479 cases in 29 cities and counties within the province and collecting 3 billion KRW in acquisition tax and other taxes.

Gyeonggi Province investigated a total of 13,339 cases, including 4,978 cases where the standard market value was used for payment and 8,198 buildings with acquisition values over 700 million KRW. Among these, 163 cases were reported at amounts at least 20% lower than the standard market value. This was based on the fact that most construction costs exceed the standard market value and that higher acquisition value buildings tend to underreport construction costs.

Under the current system, when constructing a building with a total floor area exceeding 200㎡, a contract must be signed with a construction company, and the expenses incurred must be reported as the acquisition value. If construction costs or incidental construction expenses are underreported during this process, a 20% additional tax is imposed as a penalty.

In a major case, Mr. A constructed a building in Hwaseong City and reported the contract amount as 1.2 billion KRW, down from the actual 1.9 billion KRW, and paid acquisition tax accordingly. Gyeonggi Province investigated the contractor’s ledger and collected 30 million KRW in acquisition tax and other taxes corresponding to the omitted 700 million KRW.

Mr. B omitted a 20 million KRW sewerage charge when reporting the acquisition of a newly constructed building in Suwon City, resulting in 700,000 KRW in acquisition tax and other taxes, and Mr. C, who constructed a building in Uijeongbu City, reported the contract amount as the original figure despite an increase, leading to 55 million KRW in acquisition tax and other taxes on an omitted tax base of 1.2 billion KRW.

No Seung-ho, Director of the Tax Justice Division of Gyeonggi Province, stated, "We will prevent tax base omissions through periodic inspections to ensure that acquisition tax reporting and payment obligations are properly fulfilled and tax justice is realized."