A comprehensive audit of five years of VAT filings uncovered deductible input tax credits; the district council's sustained engagement contributed to the fiscal win
Mapo-gu has recovered 2.34 billion won ($1.75 million) in overpaid value-added tax from the National Tax Service after filing an amended return covering the past five years, with the full amount incorporated into the district's revenue.
Under the current VAT Act, goods and services supplied by local governments are in principle exempt from value-added tax. However, certain categories — including real estate leasing, wholesale and retail trade, and the operation of sports facilities — are excluded from that exemption.
For districts running both taxable and tax-exempt operations simultaneously, calculating the proportional allocation of input tax credits is complex, and that complexity has led to cases of excess tax payments caused by missed deductions.
In response, Mapo-gu conducted a comprehensive audit of all VAT filings submitted between 2020 and 2025, carefully reviewing whether input tax credits had been properly claimed across its taxable operations.
As a result, the district identified deductible input tax amounts buried in budgets spent on the construction and operation of facilities, including the new Mapo 365 Community Center and upgrades to the Mapo Citizens' Sports Center.
Based on those findings, the district filed an amended return with the Mapo Tax Office last year and secured a final refund decision in September.
The significance of the refund lies in the district's having combed through existing filings to uncover previously unclaimed input tax credits and convert them into fiscal revenue.
Also noteworthy is the role played by the Mapo District Council, whose sustained interest and input added momentum to the effort — a collaboration between the executive branch and the council that yielded two results at once: sound fiscal management and effective budget oversight.
The district plans to tighten oversight of its VAT filing and payment processes going forward, with the aim of expanding its own revenue base and strengthening local public finances.
"The amended VAT return and the swift move to book the refund as revenue are the fruit of Mapo-gu and the council's active efforts to identify new tax sources," District Mayor Yoo Dong-gyun said. "We will take care to ensure that the resources secured through this hard work are directed toward projects that directly improve residents' daily lives."
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