Unpaid national tax arrears top 116 trillion won...late-payment penalties alone soar past 21 trillion won

[Financial News] With unpaid national tax liabilities exceeding 116 trillion won, more than 21 trillion won in late-payment penalties incurred before tax offices issued tax notices alone have been imposed since 2021, according to the findings.
According to data submitted on the 11th by the National Tax Service (NTS) to Rep. Kang Min-guk of the People Power Party, a member of the National Assembly’s Finance and Economy Planning Committee, cumulative unpaid national tax liabilities stood at 116.0031 trillion won at the end of June. The total number of cases reached 5,642,792.
The amount of unpaid taxes has grown every year. Arrears stood at 99.8607 trillion won in 2021, surpassed 100 trillion won at 102.514 trillion won in 2022, and continued to rise to 106.0597 trillion won in 2023, 110.731 trillion won in 2024 and 114.0969 trillion won last year.
As of June, value-added tax accounted for the largest share of arrears by tax type, at 33.4431 trillion won. It was followed by income tax at 27.4305 trillion won, capital gains tax at 13.3871 trillion won, corporate tax at 11.298 trillion won, inheritance and gift tax at 3.3681 trillion won, and comprehensive real estate tax at 1.744 trillion won.
As tax arrears have increased, so too have late-payment penalties. The ‘pre-notice late-payment penalty,’ imposed from the day after the tax return and payment deadline through the day before a tax notice is issued, totaled 21.6261 trillion won across 24,141,504 cases from 2021 through July this year. Penalties can be imposed even before a tax office issues a notice if taxes are not paid by the statutory deadline or are underreported.
The amount of these pre-notice penalties rose sharply, from 3.6552 trillion won in 2021 to 4.1017 trillion won last year. New assessments through July this year were provisionally tallied at 2.077 trillion won.
‘Post-notice late-payment penalties,’ imposed when taxes remain unpaid by the deadline stated in a tax office notice, are also surging. They rose from 702.1 billion won in 2021 to 1.1329 trillion won in 2022, surpassing 1 trillion won, and climbed to 2.6566 trillion won last year. Assessments in January-July alone amounted to 1.7359 trillion won.
Rep. Kang’s office said the sharp increase in penalties assessed points to the reality of a prolonged slump in domestic demand and the limits of the NTS’s collection methods. It also urged the NTS to shift its approach and devise measures to control the rate of growth in tax arrears and penalties themselves, rather than focusing solely on imposing penalties, since arrears are not a problem that will be resolved simply with time.

[email protected] Kim Dong-gyu Reporter