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| National Tax Service (NTS) Assistant Commissioner for Property Taxation Kim Tae-ho gives a press briefing at the NTS headquarters in Sejong, Tuesday. Courtesy of NTS |
By Lee Kyung-min
The National Tax Service (NTS) said Tuesday that it has launched an investigation into 30 foreign residents aged under 39 over suspicions that they purchased high-value homes without paying tax, in the latest government move to crack down on real estate speculation.
They were among 98 people being investigated for suspected tax evasion using a variety of methods such as setting up paper companies, falsifying financial transactions documents and deliberately failing to register as a landlord who by law is required to report rental income.
Of the total, 76 aged under 39 have become owners through what the tax agency believes illicit means including receiving money from their wealthy parents.
An unidentified foreigner in his or her 30s who owned a small company and had a five-figure annual income, bought a seven-figure house and had a six-figure credit card spending record. This was why the tax agency believes he received money from his parents to buy the house and used company funds for personal reasons, possible grounds for criminal embezzlement charges.
In another case, a 30-something person who registered as a landlord bought at least 10 houses with a combined value in the billions of won but failed to report any rent income.
Of the remaining cases, ones involving private equity funds totaled 10, while 12 were related to setting up corporate bodies.
One person set up a paper company with equity capital of only 100 won ($0.09), and failed to report income despite having received billions of won in dividends gained after investing in real estate private equity funds.
He falsely created business expenses in the exact amount of the dividends received, thereby evading corporate and financial income tax.
In another case, a stay-at-home wife bought two apartments with money from her husband and listed them as belonging to a company where she was the sole shareholder in an apparent attempt to avoid the heftier tax imposed on multiple homeowners to curb speculation.
The NTS said information of suspected tax dodgers will be handed to the law enforcement authorities for further investigation, given many of them had no identifiable income or assets at the time of acquiring the properties, a reason the agency believes tax fraud might have been at play.
"The suspects will be investigated over their borrowing capabilities, with the scope of the probe to be expanded to include firms they have financial interests in for further possible corporate tax fraud," NTS Assistant Commissioner for Property Taxation Kim Tae-ho said.
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