Gyeonggi Province identified 7,967 cases where local taxes were either used for different purposes within the grace period after receiving tax reductions or where acquisition tax was not reported despite acquiring real estate, resulting in the recovery of 14.8 billion KRW in local taxes.
From March to November last year, Gyeonggi Province conducted guidance and inspections on overall local tax operations in 10 areas including Yeoju, Dongducheon, Seongnam, Siheung, Gwangmyeong, Pyeongtaek, Goyang, Gwacheon, Uijeongbu, and Hanam. They announced on the 6th that they recovered ▲2.9 billion KRW from reduced tax rate declarations on luxury properties such as high-end housing acquisitions ▲6.6 billion KRW from use of tax-reduced real estate for purposes other than intended ▲2.8 billion KRW from unreported local taxes on leased vehicles ▲2.5 billion KRW from incorrect application of property tax rates.
In a major detected case, taxpayer A reported acquisition tax applying the general tax rate after acquiring a detached house. However, the inspection revealed that the land adjacent to the detached house was being used as an accessory land to the house. Gyeonggi Province applied a higher tax rate for acquisition tax because the accessory land area exceeded 662㎡, which is a requirement for high-end housing, and recovered the tax.
City B exempted property tax on land owned by clan C and clan association D, considering it as land designated as a historic site under the ‘Act on the Preservation and Use of Cultural Heritage.’ However, Gyeonggi Province confirmed that the land was designated as a ‘local historic site’ by City B, which is not eligible for property tax exemption, and recovered the exempted property tax.
Gyeonggi Province particularly pointed out that when acquiring vehicles, acquisition tax (2%) is paid by the leasing company, and registration license tax (2?5%) is paid by the leasing user. After the lease ends, the leasing user must report and pay the acquisition tax, but failure to do so led to additional acquisition tax recovery.
Additionally, 2,443 cases (delinquent amount of 19.4 billion KRW) were detected where wage garnishment or seizure of business sales receivables related to delinquent taxpayers was neglected or omitted. The province recommended prompt seizure actions and swift sale procedures of seized properties to each city and county.
No Seung-ho, Director of the Tax Justice Division of Gyeonggi Province, stated, "As the shortage of tax revenue continues, we will do our best this year as well to establish a stable and systematic tax revenue base through thorough inspections in areas prone to local tax omissions."
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