South Korea's National Tax Service has received about 1,600 tips on suspected real estate tax evasion since setting up a dedicated reporting center under the Lee Jae-myung administration, but it has been unable to disclose how much tax it actually collected as a result, raising questions about the center's effectiveness.
The center received a total of 1,568 tips between October last year, when it began operating, and August this year, according to data submitted by the National Tax Service to the office of Rep. Kang Min-kuk of the People Power Party, a member of the National Assembly's Strategy and Finance Committee, on the 12th. That works out to an average of about 157 tips a month. How many of those tips led to actual tax collection, however, has not been confirmed.
The center serves as a channel for reports of suspected tax evasion in the purchase, holding and sale of property. It was set up to catch suspicious transactions, including irregular financing arrangements, as the agency sharply tightened verification of where buyers of high-priced homes got their money starting last year.
The agency cross-checks incoming tips against its own tax records to analyze suspected evasion and, where necessary, confirms the facts through tax audits before collecting what is owed. When a tip meets the relevant requirements — including the collection and payment of at least 50 million won in evaded taxes — the informant receives 5% to 20% of the evaded amount as a reward. The reward is capped at 4 billion won.
The problem is that no figures have been provided showing how much of that reporting translated into actual assessments. The National Tax Service has not disclosed either the amount collected or the rewards paid through the property tax-evasion center. An agency official said the figures "are tallied manually, so compiling the statistics requires considerable time and staff." Rewards for tax-evasion tips outside the property area, however, are being tallied without difficulty. The agency said reward payments for tax-evasion tips totaled 14.9 billion won in the first half of this year, or about 70% of the full-year total paid out last year.
"Failing to produce any collection figures for the 1,568 tips reported over the past nine months means that most of them either involve unclear facts or lack specificity and credibility," Kang said. "Rather than running a showcase reporting center that produces no results, the National Tax Service should focus on real estate tax evasion in the course of its own investigative work to prevent damage to tax justice and disruption of market order."