Year-End Settlement Deduction Errors Surging...Korean Tax Administration Reform Necessary

TechubNews · 2026-03-18T23:03:28+00:00

In recent years, the amount of underpaid taxes caused by incorrect application of deduction items in year-end settlements has increased by more than 60%. Affected by Housing Funding deduction errors, the number of people excessively enjoying deductions increased from 52,000 people in 2020 to 84,000 people in 2024, with recovered taxes reaching 64.4 billion Korean won in 2023. The government needs to strengthen tax management and system improvements to address the growth in taxpayer burden.

TechubNews

2026-03-18 23:03:28

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Over the past four years, the number of cases where incorrect application of deduction items during year-end tax settlements led to underpayment of taxes has increased by over 60%. This highlights the need for the government to further strengthen the precision of tax management.

According to data obtained from the National Tax Service by Rep. Park Min-kyu of the National Assembly’s Finance and Economy Planning Committee, the number of people found to have excessively claimed deductions during the year-end settlement increased from 52,000 in 2020 to 84,000 in 2024. Especially starting in 2023, the number surged sharply, showing a two-year consecutive increase. As a result, the additional tax collection in 2023 also more than doubled compared to the previous year, reaching 64.4 billion won.

Errors related to housing fund deductions are considered one of the main causes of this growth. Housing fund deductions refer to income tax deductions applied to interest on loans used for purchasing or leasing housing, such as mortgage or full rent loans. The number of people making errors in this deduction increased from 9,000 in 2020 to 58,000 in 2024. Analysts believe this is due to the National Tax Service strengthening checks on relevant income tax deduction targets and the impact of newly added deduction items.

However, from the National Tax Service’s review process of excess deductions during year-end settlements, systemic management deficiencies have been identified. Issues include the lack of detailed categorization of current statuses, leading to criticism that preemptive measures through administrative data linkage are insufficient. Rep. Park urged improvements to the system by enhancing computer verification functions to address these issues.

This trend underscores the necessity of improving the year-end settlement system in the future and suggests that the government’s tax management system may become more refined. The increasing trend of deduction errors directly affects taxpayers’ burdens, requiring careful attention and systematic management.

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