[Game Changer] Jobis & Villains takes the headache out of tax refunds in Korea

Tech

Published: 25 Jan. 2023, 06:00 Updated: 03 May. 2023, 15:32

[Game Changer] Jobis & Villains takes the headache out of tax refunds in Korea

Kim Bum-seop, CEO and Founder of Jobis & Villains, shows a main interface of its 3.3 tax reporting app at its office in Gangnam District, southern Seoul. [PARK SANG-MOON]

When the New Year comes around, many Korean office workers face a period of hassle as they have to settle year-end tax reporting. For those working on contracts with a number of entities, the frustration is multiplied when tax time comes, which for them is in May.

Kim Bum-seop, CEO and Founder of Jobis & Villains, figured that the task is so time-consuming and document-heavy that many of them will just skip filing and give up on getting the refunds.

As soon as his start-up offered an app to process the tax reporting and refunds in 2020, many people flocked to the 3.3 app even though the service charges commissions.

In exchange for up to 20 percent of the refund as fees, the app helps with filing tax returns, estimating the anticipated tax refund and depositing the actual refund.

The number of users hit the 10 million mark last April, which means one in five of Korean people downloaded the app. Based on the sound user base, the company raised a total 38.4 billion won in investment from 14 institutions, including Korea Development Bank, Atinum Investment and Capstone Partners.

It is now looking outside of the home turf with the goal of incorporating a subsidiary in the UK this year.

While the business has done well, it could also face regulatory hurdles and challenges from certified tax accountants.

The Korea JoongAng Daily sat down with Kim, the CEO, and Kim Hyun-ju, head of global business at Jobis & Villains, to discuss the company’s expansion strategy and opportunities and risks.

Before founding Jobis & Villains, Kim made his name known in the Korean start-up scene after he founded Remember, Korea's largest business card scanner app. He graduated from KAIST with a major in aerospace engineering.

The following are edited excerpts of the interview.

Tax refunds are a very specific area of service. What brought you to start a tax refund app?

When I got into a graduate school to earn a doctoral degree in aerospace engineering, one of the first tasks assigned to me was claiming receipts related to research spending. It was customary for first-year students to handle the somewhat mundane work. The process involves sorting through sheets of receipts and filing each of them into an online accounting system, the kind of the task that no one really wants to do.

The least favored task actually translated into a catalyst that led me to run my own business instead of pursuing academia.

So, the first service offered by Jobis & Villains was an automated accounting software that simplifies the process. Later, the service named Jobis extended to support management of salaries and the analysis of financial statements.

To further expand our foothold and user base, we needed to look for a new business where there are unmet needs. Tax filing and refund is a major hassle for many, because as much as people want to get refunds, the complicated procedure often stands as an obstacle. The tax-related terms alone are enough to turn people away and give up on self-reporting through the Home Tax website run by National Tax Service.

So, we launched an app named 3.3 in 2020 to help people with the procedure, and total users broke the 10-million-mark last year.

Kim Hyun-ju, head of global business at Jobis & Villains, poses after an interview at the company's office in Gangnam District. [PARK SANG-MOON]

There are not many competing apps in this segment. Is 3.3 the first app in Korea to offer the service?

Yes, before the 3.3, there was no such an app in Korea. Some apps would help file tax reports, but what we do is get the reimbursements directly sent to the user’s private bank accounts. Outside of Korea, there are tax technology start-ups like Turbo Tax. But their offering is limited to tax return filing rather than collecting the refund and sending it to the user. What distinguishes us is that we let users claim the excess paid up to five years ago.

Who are the main users?

The dominant users are the so-called gig workers who position themselves as independent contractors, working for multiple companies or shops. More than half of the users have more than one job, being involved in certain side jobs.

These people have been often neglected or have little access to personal tax accountants. About 9.9 million people in Korea are found to have some kind of unclaimed income tax, but in Korea, certified tax accountants total around 15,000, serving some 2 million high-income earners. The rest are either not willing or capable of tapping their own accountant, but want to get the tax refund.

The Korean Association of Certified Public Tax Accountants accuse us of taking away their clients, but that’s not true because our target users don’t overlap with theirs by and large.

Still, the association filed a complaint against the company. How is the legal battle going?

The police cleared us of the charge last year. Their allegation was based on the claim that non-certified people are doing a task that must be exclusively done by certification holders. But the accusation is incorrect because it is systems — not people — that do the task. If they are to blame us for using technology to offer tax-related services, the Home Tax system run by National Tax Service should fall under the criticism.

After the successful launch of the 3.3 app, there are similar service providers popping up in the market with lower commissions than 3.3. How can it keep existing and potential users locked?

Even though they do offer tax filing and refund services, ‘how’ remains important.

We have developed proven algorithms and systems that maximize the reimbursement while mitigating the risk of being caught for misreporting. Only 0.23 percent of our users were advised for incorrect reporting.

Because of the solid track record, we see the competitors far from reaching the level of threatening us. We have made constant efforts to lower the fees, but I would not say that that is the top priority. Rather than inching down the fees, we are focused on providing quality service to help users receive the maximum amount of taxes that they can claim through thorough analysis of information and data available.

Even if we have the same data set, there are different ways of reporting it, which means there are multiple scenarios. The essence is that the automated system should be able to come up with the best way to allocate the maximum available taxes at a quick pace.

In the beginning, our estimates for tax refunds were sometimes off the mark, but now 97 percent of them are correct or above the actual refund. This shows the progress that our system has made over the relatively short period of time. At the same time, the average amount of the refunds paid has also gradually increased from 130,000 won in the beginning to 177,000 won as of December last year. We have an established team of certified tax experts and algorithm developers to work together, which makes us stand out compared to the new players.

You decided on the UK as the first overseas target for the 3.3 app. Why has UK become the first overseas country?

Initially, we aimed for Southeast Asian countries, because they are close to Korea and have a large population. But many of the tax systems in the region have not been fully digitalized, so it was hard for us to bring together spending data in a digital format. But countries like UK have advanced tax collection systems and the average salary is higher, so we believe the tax service will be in demand. The country also sees a surging growth of gig workers — an average of 14.7 percent annually between 2014 and 2021. So, I believe they will be our immediate clients.

What is the short or long term strategy for UK?

We were selected for the Global Entrepreneur Program (GEP), a tech support program sponsored by the UK government. So, we will be able to tap into the resources offered by the program especially in the beginning phase such as consulting and networking areas. We plan to launch the UK version of the 3.3 app in April, 2024. Before that, we need to build an incorporated unit after passing a layer of approvals. For 2025, we are looking to bring the service to other European nations.

Besides the refund of income tax, is there any other areas that the 3.3 wants to enter?

The tax service is not sufficient to keep our users connected throughout the year given that they will likely visit the app primarily during the reporting period. The new business is job searching service that matches part time workers nearby jobs. We acquired an app named HowMuch that offers the service. Part time workers are very keen on saving time to do multiple jobs, so the matching of jobs in proximity to their existing workplace is greatly appealing to them. The app also provides the ideal work schedule of part-time jobs to bring back maximum possible payment.

In terms of tax-related services, we aim to push beyond income tax refund by providing consultations for different types of tax claims. The 3.3 now offers services designed to track capital gains taxes and value-added taxes to serve a broader range of users.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]