At Most 15 Percent of the Actual Transaction Price

It seems likely that false or late declarations regarding housing transactions will pay a fine of up to 15 percent of the real transaction price, according to the housing transaction reporting system, which will be implemented as early as this year (related articles on A5, B3)

For instance, if a transaction involved a house that is priced at 500 million won, and it turns out that it did not make the appropriate declarations, a fine of 75 million won would be imposed.

Kim Jin-pyo, minister of finance, on a TV interview Sunday said, “We are considering specific details to implement the housing transaction reporting system within this year.” Kim added, “If it were to be violated, a fine amounting to fivefold the registering fee will be imposed.”

The registering fee is currently 3 percent of the purchaser’s reporting price in the case of individual housing transaction or the standard pricing amount for local taxes. Also, the standard pricing amount for local taxes are about half of the actual transaction price.

In relation to the issue, Lee Jong-kyu consumption taxes deliberation minister of the finance and economy department, said, “The housing transaction reporting system basically requires reporting the actual transaction price. Our intention to levy a fine of up to fivefold the registering fee is only an example showing that the amount of the fine will be around 15 percent of the actual transaction fee.”

Minister Kim also added, “The government intends to carry out strict tax investigations on construction companies who acquire huge profits from earmarking too high a price on newly built properties, and the tax authorities are collecting related materials at present.” Regarding second measures that include stricter policies such as “the concept of land as a commonwealth,” he said, “It will be decided after considering the market movement in the next three to six months.” Regarding pricing restrictions on newly built properties, which is raising controversy, Kim stated, “It is technically impossible to restrict the prices on newly built properties and will also result in contracting market supply, hence it is better to absorb the profits made from the high prices of such houses through corporate taxes.”

Meanwhile, the government is considering whether to impose transactions reporting duties on both the seller and the purchaser and to levy fines if it were to be violated or to impose such reporting duties only on the purchaser and levy taxes accordingly on the purchaser if it were violated.

An official of the finance and economy department said, “At present, it is more likely that reporting duties and fines will be imposed only on the purchasing side.”

Kwang-Hyun Kim kkh@donga.com