Property tax refund to total W630b

 

The government is preparing a massive tax refund, amounting to some 600 billion won ($430 million), after the Constitutional Court ruled that hefty taxes on high-end home-owners were partly unconstitutional.

 

The Finance Ministry yesterday said that households which paid the comprehensive property tax in 2006 and 2007 would be eligible for the tax refund. The government will assess and return the difference between the amount previously collected and the amount levied under the revised law.

 

The Constitutional Court on Thursday ruled that the current property tax law which imposes 1-3 percent tax on households which own real-estate with a combined value of 600 million won or more is unconstitutional. The court also said that a household with a single residential house would be exempt from the tax when law revision was complete. The ruling Grand National Party said Thursday that it would lift the tax floor to 900 million won and drop the tax rate to 0.5-1 percent, but details regarding the revision have yet to be decided in the National Assembly.

 

The ministry said the tax refund will total some 630 billion won, including some 200 billion won of 2006 and 400 billion won of 2007. Some 200,000 taxpayers are expected to receive the tax refund. Those who paid the tax in 2005 will not be eligible for the refund as the tax had been based on individual holdings before the law was revised in Dec. 31, 2005.

 

Households with a single residential house will also be excluded from the proposed tax refunds, the ministry said.

 

"The Constitutional Court ruled that the current law regarding a single house-holder will be effective until the law is revised. The rule won't be related retroactively to households with one house and therefore, there will be no refunds," said Yoon Young-sun, division head of the Finance Ministry's taxation division.

 

Those who sign up for tax refunds will receive their money back within this year, the ministry said. The government said that the national tax service was considering reassessing the cases itself in case taxpayers fail to report it to the taxation authority.

 

"For taxpayers' convenience, we will try to return the difference within this year. Tax offices won't take longer than two months to decide the refund and we are in talks to conduct reassessment with the national tax service to cut costs and time," the Finance Ministry told reporters.

 

This year's comprehensive real-estate holding tax payment is scheduled Dec. 1-15. The national tax service has already completed assessing and printing out this year's comprehensive property tax notices under the household-based tax system. The national tax service is considering printing out new tax notices based on individual holdings, or to have taxpayers report their self-assessed tax form with the taxation authority.

 

This year's comprehensive real-estate holding tax is estimated to total 2.1 trillion won, down from 2.6 trillion won from the previous household-based taxation system, the ministry said.

 

The Finance Ministry said that it planned to continue with its drive to combine the disputed comprehensive real-estate tax, which comes under national tax law, with property tax under the local tax law to counter complaints about double taxation.

 

Source: Korea Herald