Gwanak District Uncovers 3 Billion Won in Corporate Tax Sources Through Audits... Identifies 'Paper Company' Tax Evasion

Focused Audits on Heavy Tax Rate Evasion and Violation of Exemption Conditions
Convenience Measures for Faithful Taxpaying Corporations

Gwanak District in Seoul (District Mayor Park Junhee) announced on January 7 that it uncovered a total of 3.06 billion won in local tax sources last year through tax audits and on-site inspections targeting corporations.

Gwanak District Office building. Provided by Gwanak District Office.

The district stated that over the past year, it conducted tailored audits focusing on regular tax audit targets, corporations subject to post-management of tax exemptions and reductions, and corporations acquiring real estate exempt from heavy taxation. As a result, the district uncovered 2.51 billion won in missing tax sources through regular audits and an additional 550 million won through audits of real estate acquisitions exempt from heavy taxation, and has completed the process of assessment and tax notification for these amounts.

Major cases of newly identified tax sources include instances where corporations underreported the contract amount when declaring construction costs or omitted indirect expenses such as financial advisory fees and construction loan interest. Other cases involved corporations failing to report violations of conditions after acquiring real estate under heavy taxation exemptions, or not voluntarily paying taxes within the deadline after receiving local tax reduction benefits without fulfilling mandatory requirements.

Notably, this audit marked the first time Gwanak District identified a case of tax evasion using a 'paper company.' By focusing on corporations suspected of having false headquarters outside major cities to avoid higher tax rates applied to real estate acquisitions in metropolitan areas, the district uncovered 1.61 billion won in missing tax sources.

This year, the district plans to provide maximum convenience for companies that faithfully fulfill their tax obligations, such as deferring tax audits and adjusting schedules, to support local economic recovery. At the same time, the district will concentrate its administrative resources on thorough tax audits for corporations that fail to report taxes, in order to ensure fair taxation.

District Mayor Park Junhee stated, "While most corporations faithfully fulfill their tax obligations, some continue to miss taxes due to insufficient knowledge of relevant laws," adding, "We plan to continuously inform corporations about repeated cases of additional tax assessments to encourage voluntary and faithful tax compliance."