Gyeonggi Province Uncovers 3 Tax-Evading Corporations Using Dormant Companies to Purchase Real Estate...Collects 230 Million Won in Back Taxes

[Suwon Ilbo=Park No-hun Reporter] Corporations that acquired so-called 'dormant companies' with no business activity or closed operations and purchased real estate under those corporate names to evade taxes have been uncovered in a special investigation by Gyeonggi Province.

Gyeonggi Province announced on the 9th that it conducted a comprehensive investigation of 51 corporations within the province suspected of such tax evasion from September for two months, uncovering 3 cases and collecting 230 million won in acquisition taxes.

According to the 'Local Tax Law,' when a corporation established in a metropolitan area such as Seoul or Gyeonggi acquires real estate within a metropolitan area, the acquisition tax is applied at double the general rate (8% instead of 4%), but corporations established over 5 years ago are exempted from the surtax.

The corporations uncovered in this investigation exploited this regulation by acquiring dormant companies over 5 years old at bargain prices and purchasing real estate under their names to avoid the surtax.

Looking at the uncovered cases, Mr. A purchased all shares of a corporation with no business performance such as sales revenue for over two years and acquired a 'rental commercial building' located in Seongnam-si under that corporation's name, resulting in collection of 110 million won in acquisition tax.

Mr. B acquired a real estate business corporation in closed status and, while acquiring 'forest land suspected of speculative real estate' in the Uiwang-si area under that corporation's name, did not pay 90 million won in acquisition tax. He was subsequently uncovered after purchasing the forest land at a high price, subdividing it, and reselling it to multiple people.

Mr. C, who was a liquidator of a corporation deemed dissolved, acquired remaining shares and completed continuous registration, then purchased a house in Anyang-si under that corporation's name and was uncovered, resulting in an additional charge of 30 million won in under-paid acquisition tax.

The province will conduct local tax violation investigations on these individuals and will file charges for violations of the Local Tax Basic Law if criminal suspicion is confirmed.

Choi Won-sam, Director of the Tax Justice Division of Gyeonggi Province, said, "Unscrupulous corporations that reap unfair gains through dishonest tax evasion must be eradicated to realize tax justice," and added, "Going forward, we will thoroughly investigate corporations suspected of tax evasion so that conscientious taxpayers do not feel relative deprivation."

Meanwhile, based on the results of this investigation, the province plans to publish a 'Dormant Corporation Verification and Investigation Manual' and distribute it to cities and counties to prevent similar cases from recurring in the future.