Commercial Quarter Lease Businesspeople under `Emergency Alertness on Tax`

As the law on the protection of commercial building lease was passed on 7th in the National Assembly, commercial quarter lease businesspeople are now put on the emergency alertness on tax.

The National Tax Service (NTS) recently made an internal course, by which the NTS can levy the past 5 year-taxes that are subject to the period of prescription, if the commercial quarter lease businesspeople are found out to have reported taxes less than the original amount. An NTS official said yesterday, "Because there is no article on reservation with regard to tax in the protection of commercial building lease law, the NTS has to levy taxes according to law."

It was customary practice that the commercial quarter lease contract has been written double, that is, one for the real contract and another for the tax report. Thus, the contract was regarded as one of the areas in which the management of the source of tax revenue was difficult. According to the NTS, it was impossible to find out the case, when the less amount of contract fee was reported under the agreement between the lessor and the lessee.

However, when the commercial building lease protection law is enacted, it becomes difficult for the lessor and the lessee to report the less amount of contract fee than the original amount.

It is prescribed in this law that when the commercial building is sold at the auction or is put under the public sale, the small-scale businesspeople should be repaid foremost prior to all other rights. Along with this, it is stipulated in the law that if one wants to have the law protect one`s rights, the person has to receive the fixed date of the lease from the chief of the district tax office, which exercise the jurisdiction over the building, before January 1st, 2003, when the law begins to be enacted.

Therefore, if the lessee wants to have the law protect one`s rights, it should report the real contract fee to the tax office.

An NTS official said, "If this law is enacted, not only double contracts would be revealed one after another, but also it is anticipated that information on tax evasion will continue to be provided in the process of disputes between the lessor and the lessee regarding the contract fee."

The NTS decided to complete the data base development for the enactment of this law by the middle of the first half of next year (Jan through June), and to receive the report on the definite date as early as July.

The NTS is estimating that the number of the commercial quarter lease businesspeople is to be 400,000 to 500,000 in the nation.

Cheon Kwang-Am iam@donga.com