National Tax Service Commissioner Lim Gwang-hyeon on the 23rd noted, "A full review of 2,639 high-priced corporate dwellings subject to the comprehensive real estate tax because they exceed the publicly announced price of 900 million won found that about 42% were occupied by or used privately by owner families."
On this day, Commissioner Lim posted an article titled "Normalizing the abnormal, we will correct the practice of 'emperor residences'" and disclosed these findings.
Administrator Lim said the publicly announced prices averaged more than 2 billion won, with 453 dwellings over 3 billion won, 12 over 10 billion won, and the highest price exceeding 20 billion won. Corporations in which owners used high-priced dwellings for private purposes were uncovered across a wide spectrum, from small and midsize companies with annual sales of tens of billions of won to large conglomerates with tens of trillions of won.
Administrator Lim pointed out, "Even though current tax law clearly defines the benefits and maintenance costs of company housing used by investing executives and their relatives as taxable, it is true that irregular free occupancy has continued as an industry custom in some quarters."
Some corporations provided ultra-high-priced apartments with good "Han River views" or located in Seoul's Gangnam and Yongsan as luxury company housing for owners or their children, while keeping it an open secret from rank-and-file employees. There were also real estate speculation cases in which an owner transferred one high-priced home to a corporation to avoid multiple-home regulations.
In addition, Administrator Lim explained that it was all confirmed as fact that, under the pretext of employee welfare, some secured luxury condos worth over 10 billion won under the corporation's name and used them privately by the owner family or certain executives, making them "pie in the sky" for regular employees.
Administrator Lim said, "From the perspective of salaried workers who pay every penny of tax through withholding and are controlled over even a single office supply in the workplace, it is hard to accept the owner's private diversion of corporate assets."
The 1,097 dwellings identified by this full survey do not all necessarily indicate tax evasion. However, Administrator Lim defined such private use as abnormal conduct and saw it as an important signal indicating tax evasion risk across corporations.
He said, "We plan to conduct a strict tax audit on the overall compliance of corporations where allegations have been confirmed," adding, "The National Tax Service will expand verification to cover the overall embezzlement of corporate funds, such as luxury condos, free provision of overseas company housing for a chair's children studying abroad, or support for study-abroad expenses."
He added, "For corporations where the boundary between 'the company's public domain' and 'the owner's pursuit of private interest' is blurred, we will make this an opportunity to establish clear principles," and "We will realize tax justice and build a fair society where the majority who follow the rules are respected, not the few who enjoy privileges by breaking them."