Second cousins are fair game for the NTSArmed with the latest technology and new legislation allowing for a more liberal use of private information, the tax authorities are redoubling their efforts to find individuals failing to pay their fair share on real estate earnings.
The National Tax Service (NTS) said, if needed, it will extend its investigations to the financial information of relatives of the alleged tax evaders, even distant relatives.
“We have to act strictly against intelligent tax evasion and unpaid taxes that prevent the realization of the fair economy,” said Kim Hyun-jun, NTS commissioner, Wednesday during the tax agency’s heads’ meeting. “We will rigorously track down unearned income from real estate.”
Kim said the tax agency is striking especially hard when it comes to those illicitly inheriting high-end apartments and those who evade taxes made from renting multiple units.
The tax agency said it already verified a system for analyzing taxation information last year and will use these capabilities to track down tax evaders. It has also improved its mobile tax service apps and chat bots to help individuals properly pay their taxes due.
The biggest change this year is the NTS expanding its investigations to relatives of those who have hidden their wealth.
Previously, the NTS was only allowed to look into the financial information of alleged tax evaders. Under reforms of the Real Name Financial Transaction Act, the agency can extend its sleuthing as far as second cousins.
More aggressive investigations are in line with the Moon Jae-in administration’s war on real estate prices.
The government on Dec. 16 announced its 18th and toughest measures to tame the market and keep housing affordable.
During his New Year’s press conference earlier this month, President Moon vowed to develop additional measures to lower housing prices to levels before the recent run-up.
This year, the tax agency started imposing taxes on landlords making less than 20 million won ($17,000) a year in rents. Previously, income taxes were applied only to those who made more than 20 million won in rents.
While attending the NTS event on Wednesday, Finance Minister Hong Nam-ki raised concerns over this year’s tax collection.
“Despite the difficult conditions, the taxes collected [last year] are expected to near the target goal,” Hong said.
He added collections are likely to be challenging this year, as value-added taxes are assigned to local governments, and less in corporate taxes are likely be collected this year due to the semiconductor industry’s struggle last year.
“Securing stable tax collection is the prerequisite in managing the country,” Hong said. “As such, stable fiscal revenue through systematic and scientific tax management needs to be secured.”
In the first 11 months of 2019, the government collected 268.2 trillion won in taxes. The government’s goal was at 284.4 trillion won. The tax collected between January and November was 1.1 percent, or 2.3 trillion won less, than the same period in 2018.
The Finance Minister said this year the government will design a comprehensive reform plan on financial taxation designed to improve Korea’s capital markets, including the possible lowering of income tax rates on equity sales and stock exchanges.
In June last year, the government adjusted stock transaction taxes for the first time in 25 years.
The tax rate was lowered from 0.15 percent to 0.10 percent for Kospi stocks and 0.30 percent to 0.25 percent for the secondary Kosdaq market.
The goal is to encourage higher participation by retail investors in the Korean stock markets.
He also said the government will come up with a system for taxing cryptocurrency, which has recently surfaced as a major issue.
BY LEE HO-JEONG [firstname.lastname@example.org]