Unpaid taxes accumulate to record high of over $70 bn in S. Korea

Unpaid taxes

The amount of taxes owed but not paid to the government has accumulated to top 100 trillion won ($70 billion) in South Korea, the biggest ever, with the unpaid dues by wealthy tax scofflaws accounting for more than half of the total.

The cumulative amount of national taxes in arrears reached 100.7 trillion won as of June 2022, adding 1.99 trillion won from the same month a year ago when the National Tax Services began recording related data, Maeil Business Newspaper found after studying the tax authority¡¯s data. That is tantamount to 25 percent of the Korean government¡¯s annual tax revenue of 400.5 trillion won estimated for this year.

Cumulative tax arrears refer to unpaid taxes that have not exceeded the period of limitation on the authority to collect tax, which range from 5 to 10 years.

Of the total cumulative tax arrears, nearly 90 percent, or 89 trillion won, are labeled as taxes that are unlikely to be collected as delinquent taxpayers are missing or do not have enough assets to pay unpaid taxes.

The Korean tax authority has been struggling to stop tax cheating with only about 1,800 tax collectors for the whole country. The tax authority has been able to collect unpaid tax 10.7 trillion won on average per year.

Of a total of 1,275,513 delinquent taxpayers last year, those with unpaid taxes amounting to 100 million won or more counted at 156,655 to comprise 12 percent. In terms of amount, taxes unpaid by such wealthy individuals accounted for 56 percent of the total. This means six out of 10 delinquent taxpayers that the tax authority can track down and recoup dues are defaulters of large amount.

The National Tax Services has shored up its effort to catch wealthy tax evaders that use new cheating methods such as use of virtual assets and other new financial products, said an official.

The authority was able to boost its operational efficiency in tax collection. Last year, the amount of tax collection per tax authority official averaged 15.98 billion, up 16 percent from a year ago. The cost of collecting 100 won of tax fell 14 percent to 0.54 won over the same period.

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