Gyeonggi Province to Pursue VAT Refunds of 7.1 Billion Won Improperly Levied Over 5 Years

[Suwon Ilbo=Reporter Park No-hun] Gyeonggi Province is pursuing VAT refunds for administrative costs improperly levied on the relocation and installation of utility poles and communications poles, commonly referred to as 'electric poles.'
A court ruling determined that costs incurred in relocating utility poles and communications poles during public project implementation are not subject to VAT, and a total of approximately 7.116 billion won in additional tax revenue, including refunds to 31 cities and counties in the province, is expected to be secured.

In response to a court decision from December of last year in a VAT recovery lawsuit filed by Pyeongtaek City against Korea Electric Power Corporation in July 2017, which ruled that "relocation costs for utility poles and communications poles caused by public projects cannot be considered compensation for the supply of transaction services subject to VAT," the province announced on the 21st that it is pursuing VAT refunds together with 31 cities and counties and public institutions in the province.

Considering that the statute of limitations for VAT refunds is 5 years, the VAT that the province and 31 cities and counties in the province can receive is 7.116 billion won levied on 990 relocation construction projects carried out from 2014 through the first half of this year.
The province plans to complete the refund procedures by this month by having project implementers such as Korea Electric Power Corporation and KT file VAT refund adjustment reports with the National Tax Service.
This VAT recovery came about after Pyeongtaek City proposed in March that VAT refunds be expanded to 31 cities and counties in the province, and the province actively accepted the proposal.
The province conducted a total of two comprehensive surveys from March through last month, identifying that approximately 7.1 billion won in VAT refunds are possible by correcting improper practices, thereby establishing fair tax administration and seeking to increase fiscal revenue and reduce expenditure budget.

Ahn Dong-gwang, the province's Policy Planning Officer, stated, "Currently, some cities and counties are found to have cases where VAT is improperly paid due to utility pole relocation construction during public project implementation," and added, "By establishing close cooperation with 31 cities and counties in the province and related organizations, we plan to continuously monitor to prevent similar cases and prevent unnecessary waste of tax revenues."