From last year until July of this year, over 3,400 nominee accounts reported to the National Tax Service (NTS) have been detected. Despite the ongoing misuse of nominee accounts as a means of tax evasion by high-income self-employed individuals, the NTS has faced criticism for its inadequate management of related information, including the lack of separate tracking by financial institutions.
On October 4, Rep. Kang Min-guk of the ruling People Power Party revealed data from the NTS regarding 'nominee account reports by financial institutions.' According to the data, a total of 3,471 nominee accounts were detected across 28 financial institutions from last year to July of this year.
The highest number of accounts was found at NH Nonghyup Bank, with 703 cases. This was followed by KB Kookmin Bank with 497 cases, Nonghyup with 471 cases, and Shinhan Bank with 319 cases. Together, these four banks accounted for 1,990 cases, or 57.3% of the total.
IBK Bank reported 277 cases, followed by Woori Bank with 270 cases, Kakao Bank with 241 cases, Hana Bank with 185 cases, iM Bank with 91 cases, and Saemaul Geumgo with 85 cases.
However, the number of reports regarding nominee accounts has been declining recently. From 2020 to July of this year, a total of 78,398 nominee accounts were reported to the NTS. The annual breakdown includes 12,568 in 2020, 10,743 in 2021, 13,988 in 2022, 12,961 in 2023, 12,769 in 2024, and 10,739 last year, showing a downward trend since peaking in 2022.
The rate at which reported nominee accounts have led to actual tax assessments has remained around 30%. Over the past seven years, there have been 24,648 cases where reports of nominee accounts resulted in tax audits or written confirmations, accounting for 31.4% of all reports. The number of cases utilized for tax assessments has steadily decreased from 6,245 in 2020 to 2,698 last year.
The NTS has also seen a decline in the issuance of rewards for reporting nominee accounts. The agency offers a reward of 1 million won for each report that leads to a tax recovery of over 10 million won.
In the past seven years, a total of 7,488 rewards have been issued, amounting to 7.486 billion won, with only 9.6% of all nominee account reports resulting in rewards. The number of rewards issued has decreased from 1,784 cases (17.82 billion won) in 2020 to 704 cases (7.04 billion won) in 2024, although there was a slight increase to 769 cases (7.69 billion won) last year.
Rep. Kang criticized the NTS for its inadequate management of statistics related to nominee accounts. He noted that the NTS does not separately track the overall detection of nominee accounts and fails to maintain separate statistics for each financial institution, despite the nominee account numbers and financial institution names being recorded during the reporting process.
The data on nominee account reports by financial institution from last year to July of this year was compiled only after a request from Rep. Kang's office.
Kang stated, "It is unreasonable to simply attribute the decline in nominee account reports to the economic downturn caused by COVID-19 and the efforts of the NTS while failing to manage or even retain valuable information reported by the public."
He added, "Neglecting nominee accounts not only raises concerns about their misuse as a means of tax evasion, such as sales omissions, but also poses significant issues regarding tax equity with honest taxpayers. The NTS should increase rewards and develop proactive promotional measures to eradicate nominee accounts and encourage reporting."
The NTS responded, stating, "We manage individual reporting information accurately, but we do not maintain separate statistics by financial institution. We will explore various measures to eradicate the use of nominee accounts."
* This article has been translated by AI.
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