ROK Drop

Avatar of GI KoreaBy on February 11th, 2013 at 2:45 am

How To Avoid Taxes With A Officetel

I have heard this before that it is possible to avoid taxes with a Officetel and the Donga Ilbo explains how this loop hole works:

○ All about taxes

An officetel is defined as a residential or business unit, depending on how the tenants report their residency to the government. Owners of business-purpose officetels are exempt from universal property tax and can get a refund of valued-added tax of 10 percent of the construction expenses.

But owners of residential officetels face higher taxes because they are defined as owners of multiple homes. Unless they register their as entrepreneurs running a rental housing business, they must pay comprehensive real estate holding tax and get no refund of value-added tax. Even if they get the refund, they have to repay the tax if they use their properties for residential purpose before completing the required rental period.

So most officetel owners first register their properties as for business purposes before leasing them to tenants without reporting to the authorities. This is why they do not want tenants to report their moving in to authorities. [Donga Ilbo]

You can read for about this tax loop hole at the link plus the problems it can cause.

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  • guitard
    3:28 am on February 11th, 2013 1

    I always thought a loophole implied that someone was taking advantage of how a law was written and doing something that seemed shady – but was technically still within the law.

    The part about how an officetel owner registers the property to be used as a business and then leases it to a tenant without reporting the change in status to the authorities doesn’t sound like a loophole – it sounds straight up illegal.

  • tbonetylr
    5:09 pm on February 11th, 2013 2

    One word – “Fraud” but that word isn’t in the Korean language, it’s diminished to “cheating,” something kids do. So when an adult does it, it’s not really that bad.

    Prostitution has moved into “officetel’s” and so we have this…

    According to the Ministry of Public Administration and Security, Monday(2013), the total property tax collected from room salons and nightclubs amounted to 152.4 billion won in 2011, DOWN 1.7 percent from the previous year.


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