Amount of gift tax evasion soars more than 10 times over the past four years

A view of the Internal Revenue Service. Courtesy of the Internal Revenue Service

The amount of gift tax evasion collected by the National Tax Service through tax audits has soared more than 10 times over the past four years. This can be attributed to the rise in real estate prices, which has resulted in a larger scale of gifted property and an increase in the number of giving.

According to the National Tax Statistics published by the National Tax Service on January 22, the amount of gift taxes levied by the agency through its tax audits in 2022 was 205.1 billion won, up 81.6 billion won (66.1 percent) from the previous year. It is the largest amount since 2016, when the statistics began to be compiled, and has increased more than 10 times compared to that of 2018 (19.8 billion won).

The amount of gift tax collected has been increasing rapidly in recent years. It more than doubled in a year from less than 20 billion won in 2018 to 55.6 billion won the following year. It surpassed the 100 billion won mark for the first time in 2021 (123.5 billion won) and reached the 200 billion won mark within a year.

Experts say the biggest reason is the sharp increase in real estate prices, such as apartments, in the late 2010s. As real estate prices rose and the value of gifted assets increased, the amount of tax collections from tax audits also increased.

The increase in the number of giving itself is also one of the reasons for the increase in the amount of additional tax collections. The number of gift tax reports increased from 145,000 in 2018 to 215,000 in 2022. During the same period, the value of gifted assets increased from 27.4 trillion won to 37.7 trillion won. Giving between parents and children accounts for 71 to 75 percent of the total value of gifted assets each year.

The increase in the number of tax audits in 2022 also affected it. The number of tax audits has decreased every year for three years since 2018, but in 2022, it exceeded 400 again in four years, up 132 (48.7 percent) from the previous year (271) to 403.

The amount of tax levied per tax audit has also jumped more than 10 times over the past four years. It was around 41 million won in 2018, but after soaring to 141.46 million won in 2019, it nearly doubled every year, including 299.37 million won in 2020 and 455.71 million won in 2021, and exceeded 500 million won in 2022 (59.01 million won).

The increase in the amount of tax collections through tax audits at a time when the scale of gifts is increasing suggests that illegal and expedient giving methods are also increasing. Some point out that rising asset prices will intensify the inheritance of wealth while encouraging illegal and expedient ways of giving.

※This article has undergone review by a professional translator after being translated by an AI translation tool.