"Corporate Investigation Task Force Proves Effective"... Gangnam-gu Collects 1.7 Times More in Evasion and Concealed Taxes

124 Billion KRW Recovered from 292 Cases of Tax Evasion and Concealment
Illegal Corporate Tactics in Gangnam Real Estate Acquisition Uncovered

Gangnam-gu, Seoul (District Mayor Jo Seong-myeong) announced on the 13th that it recovered 292 cases of corporate tax evasion and concealment amounting to 12.4 billion KRW through proactive field-centered investigations last year. This represents a 73% increase compared to 7.2 billion KRW in 2023.

To counter sophisticated corporate tax avoidance methods, the district established a dedicated corporate investigation team in July last year. Centered around this team, four corporate teams were formed into an investigation unit to focus on four key tasks: acquiring dormant corporations and then purchasing real estate, corporations outside metropolitan areas acquiring real estate in Gangnam-gu and establishing headquarters and branches, disguised acquisition of luxury housing, and establishing or increasing capital in corporations to avoid registration and license tax surcharges. Within three months, they uncovered 11.5 billion KRW in omitted tax bases.

Subsequently, thorough inspections were conducted on acquisition tax by major shareholders of unlisted corporations and omissions in property tax surcharge rates for intelligent buildings to prevent tax omissions.

Major detected cases include 13 instances where corporations established outside the densely regulated metropolitan area acquired real estate in Gangnam-gu and operated headquarters and branches, resulting in a total recovery of 2.2 billion KRW. Additionally, seven cases involved newly constructed mixed-use residential buildings being used almost entirely as luxury housing but reported as general housing, leading to 1.8 billion KRW in taxes imposed.

Gangnam-gu Office building. Provided by Gangnam-gu.

Major shareholders owning more than 50% of shares are considered to have acquired the company and must pay acquisition tax, but 41 cases where acquisition tax was not reported were found, resulting in 1.7 billion KRW collected. For 11 cases that disguised themselves as non-surcharge industries despite being subject to surcharge tax and reported and paid at general rates, 600 million KRW was imposed.

For 22 cases where the property tax surcharge rate was omitted in intelligent buildings automated for heating, cooling, lighting, and security, 400 million KRW was recovered. Additionally, 570 million KRW was collected for two cases where dormant corporations were acquired to avoid surcharge tax and purchase real estate, and 5.1 billion KRW was additionally collected for 196 cases that received tax exemption benefits through failure to meet exemption requirements or omission of reporting.

Meanwhile, the district is also proceeding with tax notice and pre-assessment review requests for 2.5 billion KRW worth of 25 cases among the uncovered tax bases.

This year, the district plans to actively identify corporations that evade surcharge tax and do not comply with exemption regulations by utilizing diverse tax investigation techniques. Furthermore, to enhance the objectivity and fairness of tax investigations, the district will revise the ‘Gangnam-gu Tax Investigation Operation Rules’ this year and strive to protect taxpayers’ rights through the Local Tax Deliberation Committee.

The taxpayer protection officer system, which safeguards honest taxpayers, will also be revitalized. This system resolves grievances related to local taxes and reduces damages caused by unreasonable tax impositions. It provides services such as handling local tax grievance complaints, protecting taxpayer rights during tax investigations and delinquency procedures, managing extensions and postponements of tax investigation periods, and consulting on local taxes (acquisition tax, property tax, etc.). Over the past two years, it has helped 57 people recover 77.62 million KRW in taxes.

District Mayor Jo Seong-myeong stated, “We will thoroughly investigate concealed and evaded tax bases to realize tax justice while operating balanced tax administration that protects the rights of taxpayers who faithfully pay taxes. We will continue to establish fair taxation and enhance the credibility of tax administration.”