Municipal gov'ts struggle to collect due taxes from foreign residents

Seen are notices of arrears written in multiple languages — English, Chinese, Vietnamese, Uzbek and Cambodian — for foreign residents in Paju, Gyeonggi Province. Courtesy of Paju City

Korea is facing growing problem of tax arrears by foreign nationalities as the number of international residents in the country increases, according to officials, Thursday.

In response, municipal administrations in Gyeonggi Province, which has the largest foreign population, are devising measures to enhance foreign residents' understanding of tax payments and raise the collection rate, such as sending bills in foreign languages.

According to the Ministry of Justice, nearly 2 million long-term foreign residents live in Korea as of June.

Gyeonggi Province has the largest proportion of the nation's foreign population taking 34.6 percent of the total, followed by Seoul with 20.3 percent, South Chungcheong Province with 6.8 percent and Incheon with 6.5 percent.

Several municipalities in Gyeonggi Province are facing increasing tax arrears with foreign residents.

In Seongnam, the arrears by foreign residents jumped from 1.6 billion won ($1.16 million) in 2021 to 2.52 billion won as of the end of August this year. This adds up to 60 billion won, taking up 4.2 percent of the city's total local tax arrears.

Paju aso has 1,245 foreign local tax delinquents and nearly 878 million won in arrears while neighboring Yangju also has 3,762 cases amounting to 339.7 million won in arrears.

Under the supervision of the Gyeonggi Provincial Government, city and county officials are making efforts to tackle the issue.

Seongnam and Paju sent notices of arrears written in multiple languages and installed notices and banners in areas where foreign residents are concentrated to encourage those in arrears to make payments.

In addition, strong measures such as the seizure of deposits and real estate, public sale of vehicles and restrictions on visa extension are planned for those in arrears. Work visa holders are subject to seizure of departure maturity insurance and return cost insurance.

"The problem of foreigners' arrears continues to increase due to difficulties in communication and lack of tax awareness," a Seongnam city official said. "We plan to strengthen the disposition of arrears in the same way as Koreans during the special settlement period."

An official from the Gyeonggi Provincial Government echoed these sentiments, explaining several measures local governments are taking to guide foreign residents to pay taxes.

"The procedure is not much different from that for taxpayers of Korean nationality," the official said. "Local governments check and synchronize the residential status of foreign taxpayers to the information system through a fact-finding survey, then provide payment information to their residential area."

Also, since 2017, local governments in Gyeonggi Province have guided foreign residents to check their local tax arrears before getting a visa extension.

Just like Korean taxpayers, those with over 30 million won of tax arrears are banned from leaving the country to prevent them from fleeing overseas, while taking additional measures related to foreign delinquent taxpayers' insurance and property.

"The reality is that most foreign delinquent taxpayers have difficulty communicating and lack tax payment awareness," a local government collection department official said. "We will strengthen the arrears collection measures equally with Koreans."