Gyeonggi Province Launches Local Tax Overpayment Refund System Excluding Suwon

Going forward, excluding Suwon, residents in Gyeonggi Province can be assured of receiving full refunds if they pay excess local taxes. Gyeonggi Province has introduced the nation's first digital payment system for local tax overpayment refunds to block refund-related fraud at its source.

On the 17th, the province announced that it has adopted an 'Electronic Payment System for Local Tax Overpayment Refunds' for transparent management of local tax overpayments and began operating it in 30 cities and counties across the province, excluding Suwon, from the 15th.

The electronic payment system for local tax overpayment refunds is an operational system that returns excess local taxes paid by taxpayers through a computerized overpayment system when they have paid more taxes than the standard amount due to changes in taxation systems.

The system connects the standard local tax information system operated by cities and counties with the computerized system of Nonghyup (National Agricultural Cooperative Federation), which the province explained can prevent data manipulation issues and taxpayer account errors in advance.

In April of last year, a local tax collection officer in Hwaseong City transferred 1.29 billion won in local tax overpayments to accounts under the names of relatives rather than taxpayers and was arrested. This incident prompted the province to suggest to the Ministry of the Interior and Safety the development of a system capable of preventing refund fraud at its source.

An official surnamed A at Hwaseong City Hall exploited this loophole by arbitrarily manipulating overpayment details transmitted to financial institutions and embezzled 1.29 billion won.

Since the incident, the province has focused on establishing preventive measures against overpayment fraud, including computerized management of various supporting documents and encryption processing of overpayment details transmitted to banks.

A provincial official stated, “The Electronic Payment System for Local Tax Overpayment Refunds is linked between the provincial treasury and city and county treasuries managed by Nonghyup's computerized network and is applied to 30 cities and counties in Gyeonggi Province, excluding Suwon where the city treasury is under the Industrial Bank of Korea,” adding, “Going forward, we will do our best to block local tax overpayment refund fraud at its source and ensure transparent and efficient local tax administration.”