Gyeonggi Province Uncovers 4.4 Billion Won in Hidden Tax Revenue Through Citizen Auditors

[Suwon Ilbo=Reporter Park No-hoon] Gyeonggi Province has uncovered 4.4 billion won in omitted tax sources through a specialized audit conducted in collaboration with citizen auditors.

Gyeonggi Province announced on the 7th that it conducted a "Specialized Audit for Uncovering Omitted Tax Sources in Collaboration with Citizen Auditors" over 15 days from June 1st to 19th, collecting 4.4 billion won in provincial taxes across 862 cases in four sectors.

Prior to the audit, the province selected four high-risk themes with significant potential for tax omission: ▲cases where related parties made improper transactions and underreported acquisition tax ▲cases where corporations acquired stock and became controlling shareholders (ownership exceeding 50%) without reporting acquisition tax ▲cases where golf memberships were acquired without reporting acquisition tax ▲cases where individuals purchased units at knowledge industry centers with acquisition tax exemption and then sold or leased them—and conducted intensive investigations combining data review and field inspections across all 31 cities and counties.

As a result, the audit uncovered cases where corporations and their representatives engaged in real estate transactions at prices significantly below market value and underreported acquisition taxes.
Cases were also found where shareholders acquiring corporate stock with ownership exceeding 50% or acquiring memberships at private golf clubs failed to report acquisition taxes.
Cases were identified where individuals purchased knowledge industry center units with acquisition tax exemptions and left them vacant, or leased or sold them to other business operators without being charged the previously exempted acquisition taxes.

In particular, while acquisition tax exemptions are provided to initial purchasers to support companies entering knowledge industry centers for business purposes, field investigations revealed numerous problematic cases where some investors registered only as business operators, purchased units, then leased them to other companies for investment purposes—resulting in investors being charged back the exempted taxes while the actual tenants using the facilities for manufacturing could not benefit from the exemption.
After the audit, Gyeonggi Province will issue tax assessments and collect the 4.4 billion won in omitted taxes as revenue for the province.

Six citizen auditors from Gyeonggi Province who are tax experts including certified public accountants and tax accountants participated in this audit. Through preliminary briefing sessions, they understood the audit direction, identified tax targets using specialized data analysis techniques, accompanied field inspections where they made direct judgments on disputed matters, and performed substantive auditor roles throughout the entire audit process, thereby conducting more fair and thorough audits.

Kim Jong-goo, Head of Audit Coordination for Gyeonggi Province, stated, "Going forward, we will work together with citizen auditors to maximize experts' capabilities in uncovering new audit findings," and added, "We will continue to uncover hidden tax sources by conducting comprehensive investigations and pursuing full collection from taxpayers who improperly evade taxes, in order to establish a fair tax compliance culture."