Story of a Big Player from Gangnam

It was Friday.

Gun-Ho went to work in the GH Building in Sinsa Town. He was having a cup of coffee sitting on the sofa in his office with his legs crossed.

"Young-Eun is coming home today."

Gun-Ho called for Assistant Manager Hong. When Assistant Manager Hong entered his office, Gun-Ho said while handing a bankbook and his stamp to him, "This is my bank account where I receive all my salaries. Please withdraw 50 million won from the account and bring it to me. Please make five 100 million won bills."

"Yes, sir."

Gun-Ho wanted to give some money to Young-Eun that evening. He wanted to do so ever since he realized that he had never given Young-Eun any money for living expenses. Well, actually, there was nothing much that Young-Eun had to pay as living expenses while she was with Gun-Ho. Whenever they dined out, Gun-Ho always paid for it. Young-Eun often did some grocery shopping on Fridays on the way to Tower Palace condo, but it wouldn't have cost her much anyway.

After a while, Assistant Manager Hong, who went to a bank to run an errand for Gun-Ho, came back to Gun-Ho's office.

"Sir, here is 50 million won that you asked me to bring."

"Thank you."

"And, I will have to be out of the office for a while now."

"Why? Where are you going?"

"It's about the capital gain tax related to GH Logistics' property that was recently sold. You asked me the other day to find a good tax consultant for it. The tax accountant office that I contacted earlier about it asked me to stop by their office."

"Oh, I see. Please pay your full attention to what they say and let me know. I will give them a high consultation fee for it."

"Yes, sir."

Assistant Manager Hong came back after lunchtime.

"Sir, I just came back from the tax accountant office."

"What did they say?"

"Here is what they told me. If you made profits out of a real property transfer and the profits exceed 500 million won, you have to pay capital gains tax of 42%. If you owned that property for less than 1 year, then you have to pay 50% of the profits that you made."

"Hmm, I will have to pay half of the profits that I made then for tax."

Gun-Ho did his math in his head.

'I spent 2 billion won to acquire the auto repair shop. I subsequently acquired the adjacent farmland for 900 million won, and that landlocked property cost me another 1 billion won. So, the purchasing price of the entire property is 3.9 billion won. I then spent 400 million won to convert the land use. If I include all the relevant taxes, the land flattening cost, and other fees, I can assume that I spent an additional 200 million won. That will make the cost for the entire land for me 4.5 billion won. I sold that real property for 6.5 billion won, so the profit that I made from the sales is 2 billion won. And, I will have to pay half of the profit for capital gains tax which would be 1 billion won.'

Assistant Manager Hong continued to talk, "But that applies to individual sellers. If it's for a company, the rules are different. For a company, the tax rate is 10% for a profit of up to 200 million won. And that tax is not considered as capital gains tax, but it would be included as part of corporate tax."

"Hmm, really?"

"If it made more than 200 million won, then it will have to pay 20% of the profits. If the property was used for non-business purposes, you need to add another 10%, so the company will have to pay 30% of the profit. Even though it was not a non-business purpose property, if the company owned the property for less than 1 year, then it still has to pay 30%. They said that the property would be considered that it had been used for business purposes since it was being used to store freight trucks for a transportation business."

"The company had owned the property for less than one year, but it had to sell it to make a business investment in China. Will it count? Will they consider the reason why it had to sell it?"

"I don't know. The tax resulting from the sales transaction will be added to the corporate tax. So, I think you'd better discuss with the tax accountant office that has been handling GH Logistics' tax filing."

"I guess I will have to pay around 400 or 500 million won."

"I don't know, sir."

Assistant Manager Hong smiled, but he seemed to be reluctant to give a clear answer for it.

"Thank you, Mr. Assistant Manager Hong. Did you pay for their consultation already?"

"I told them that we would pay them. They will send us a bill."

"Good work."

"Well, I will leave these documents with you, sir."

Gun-Ho made a call to his sister.

"Sister, did you already change the tax accountant office to someone else?"

"Yeah. I changed to the office located in Jeongwang Town, Siheung City."

"Jeongwang Town? Isn't it a part of Ansan City?"

"No, it's within Siheung City. Someone introduced that tax accountant office to me."

"Can you text me with their office address and phone number? I need to talk to them about the property sales transaction."

"You are talking about the capital gains tax, right?"

"Yeah."

"I haven't really talked with their tax accountant, but I know their office manager—Manager Yang. I will call her, so she will expect your call."

"Sounds good. Thank you."

Since it was Friday, Gun-Ho thought that he would better contact them on the following Monday.

Gun-Ho received a call from Jae-Sik Moon who was in China right now.

"The joint venture company's business registration has been issued."

"Really?"

"Since the investment funds of 50,000 dollars that you sent were received, the Chinese people here started the process."

"I knew they would do that."

"They asked me when they could expect to receive additional investment funds of 450,000 dollars, and I told them that we will need to get the bus business license first."

"Good point."

"It seems that they will have to get the business license for the passenger transportation business, and once they get it, they need to obtain the bus line right from Antang City to Guiyang City. They call it Xianlu Pai."

"Hmm, I see."

"The thing is that they don't give all at once, but they give as much as needed based on their demand estimate."

"That means that they will consider the volume of traffic, huh?"

"I think so."

"That sort of makes sense."

"According to them, they are trying not to overissue the bus line right even though it wouldn't fully serve their own interest."

"Hmm, is that so?"

"They have been preparing and planning for this joint venture project, but they haven't really started anything until now. They now actually began to launch the project. I feel like they started working while holding me as a hostage, who was sent by their Korean business partner."

"What? A hostage? Hahaha."

"I can see that they really want to do this project as a joint venture. I feel like they are holding me tight, so their Korean business partner can't back out."

"Jae-Sik, it's a government-owned company, not a private entity. A government-owned company maybe doesn't want to rush into generating profits. Just relax and focus on what you can do there like learning the Chinese language. Try to enjoy life there."

"I know. I've been studying the Chinese language with Ms. Eun-Hwa Jo, not that I like to study, but I feel like I have no other option. This area is very different from Shenyang City where Suk-Ho Lee is staying, or Beijing, or Qingdao City where a lot of Koreans are living. In this area, I can't even buy foods if I don't speak Chinese. I'm trying really hard to learn Chinese now. I'm extremely motivated."

"Haha. Good for you."