40s Sentenced to Heavy Penalty for 100 Billion Won Tax Crime by Running 'Poktan Eopche'

Court Sentences Defendant to 8 Years in Prison and 15 Billion Won Fine
Approached Victims by Promising to "Reduce Taxes"

A man in his 40s who committed tax evasion crimes worth around 100 billion won by creating so-called 'poktan companies' and issuing false tax invoices was sentenced to a heavy prison term.

The Criminal Division 1 of the Tongyeong Branch of Changwon District Court (Chief Judge Kim Young-seok) sentenced Mr. A, in his 40s, who was indicted for violating the Act on the Aggravated Punishment of Specific Crimes (issuance of false tax invoices, etc.), to 8 years in prison and a fine of 15 billion won, according to Yonhap News on the 13th.

Mr. A was prosecuted for creating several so-called 'poktan companies' under acquaintances' names from 2017 to 2019, then deceiving others by making it appear that these poktan companies supplied goods or services to trading partners and issuing false tax invoices.

Poktan companies essentially do not conduct actual business activities or operate only nominally, but fabricate fake tax invoices as if real transactions occurred. Businesses receiving tax invoices from poktan companies can report lower operating profits by treating non-existent expenses as costs, thereby reducing taxes such as value-added tax. Poktan companies continuously default on taxes like value-added tax and suddenly close down all at once, like a bomb exploding, which is how they got their name.

Mr. A committed the crimes using false tax invoices while handling tax accounting tasks for small business owners in the ship processing industry in Geoje, Gyeongnam Province. He approached local subcontractor small business owners by suggesting they could reduce taxes and took a portion of the gains as compensation for helping them evade taxes. The total amount involved in the crimes committed through false tax invoices is reported to be about 100 billion won. In addition, Mr. A also embezzled some of the funds entrusted to him in the course of his work.

Victims who were deceived by Mr. A’s claims that they could save on taxes were later hit with massive tax surcharges. It is reported that some of these victims, unable to bear the burden, took their own lives.

The court stated, "Mr. A committed a serious crime that undermines tax justice and tax order," and pointed out, "The crime period was long, and the total supply value of the crime also reached 100 billion won." Regarding the sentencing, the court explained, "We comprehensively considered that the damage was not restored and that forgiveness from the victims was not obtained."