Crackdown on Tax Evasion by Foreign Residents as Scrutiny Intensifies
In a significant move, the National Tax Service (NTS) of South Korea is investigating 49 foreign nationals suspected of tax evasion in relation to the purchasing of high-priced apartments in the affluent districts of Gangnam, Seocho, and Songpa in southern Seoul.
According to the investigation, approximately 230 high-priced properties are involved, with nearly 40% of the suspects being Korean descendants, primarily from the United States and China. The alleged tax evasion amounts to around 300 billion won (approximately $217 million).
The methods suspected in these cases include disguised gifts using overseas accounts, undeclared income for property purchases, and failure to report rental income. Some purchases involved the use of corporate loans disguised as operating capital or money sourced through illegal channels like virtual assets and money laundering.
Min Ju-won, the head of the Investigation Bureau at the NTS, held a briefing at the NTS headquarters in Sejong on August 7, discussing the tax probe. The investigation is focused on these specific districts in southern Seoul.
The NTS plans to track funds thoroughly, including cooperation with domestic and foreign agencies, and employ forensic techniques to enforce tax laws strictly. They are also considering institutional reforms to close regulatory gaps, such as requiring all foreign household members to register for housing tax purposes or removing special benefits currently available.
This investigation is part of a wider government crackdown on tax evasion by foreigners in South Korea’s real estate market amid social concerns over foreign buyers affecting housing prices and market fairness. The government is addressing complaints of "reverse discrimination," where Koreans face borrowing limits while foreigners can more freely purchase real estate through foreign financing.
In summary, the current investigations reflect expanding enforcement against foreign nationals involved in tax evasion on high-value apartment acquisitions in Seoul, with potential legal and regulatory changes forthcoming to prevent similar cases.
- The investigation by the National Tax Service (NTS) of South Korea into 49 foreign nationals for tax evasion in relation to high-priced property purchases is part of a wider government crackdown on tax evasion in the country's real estate market.
- The business of purchasing high-priced apartments in Gangnam, Seocho, and Songpa in southern Seoul by foreign nationals, suspected of tax evasion, has been under scrutiny due to concerns about its impact on the economy, housing prices, and market fairness.
- The finance ministry is considering institutional reforms, such as requiring foreign household members to register for housing tax purposes, as part of efforts to close regulatory gaps and enforce tax laws more strictly in the general news of tax evasion and crime & justice.
