“Since It’s Cheap, Customers Should Pay Our Taxes!” Metro Shops’ Ridiculous Tax Evasion
“Oh, Paying by card? W33,000, please.”
Last weekend, at Incheon’s Bupeong station, underground shopping mall patron Miss Park (23) found herself in a tussle with a shopkeeper. When asked the price, the store clerk said it was W30,000, but when he rang her up at the register, it came to W33,000. The clerk shot back with: “We’re stuck with additional taxes when cards are used, so what else can we do if you use a card to pay for W30,000 worth of clothing?”
Instances of rejecting credit card transaction fees are common at many underground shopping centers. Owners have realized when they sell low-priced goods at less than W10,000 there’s “nothing left to cover costs” so the consumer should pick up the extra cost when the sum is under W10,000. Customers thought it uncomfortable at first, but then decided it wasn’t a big deal.
To test this, we went out last weekend to the aforementioned Incheon Bupeong station shop as well as Seoul’s Jung-gak station and Gangnam station’s underground shopping malls. Here are our results: among the majority of businesses selling items like clothing, shoes, and bags, we first inquired to the salesperson about the suggested price and then the price when using a card. In most cases, they pushed for around 10% in additional fees. Some places even had signs openly saying “Additional Taxes Apply”. Consumers who never carry cash commonly try to negotiate deals like: “If I pay a portion of the price in cash, can you discount the surtax?” but these customers are usually directed to nearby ATMs to withdraw the cash needed for the full purchase.
In actuality, this is illegal. Last year, the introduction of a system to label the final pricing of products, without adding surtaxes, was hammered down. Big businesses are abiding by the system, but small, mom-n-pop stores have yet to comply.
“If you pay with a card, we have to declare our income and are left with nothing,” one shop owner complained to a customer. Miss Lee, 32, a fashion shopkeeper at Seoul’s Jung-gak underground mall said: “For the majority of cheap items I charge between W10,000 and W30,000, I don’t make a dime beyond the list price. In the case of direct retailers, it’s no wonder that business owners have to charge separate fees, or other similar things.” Sadly, that’s the way it has to be.
The National Tax Service also clearly sees this as illegal. Article 19 of the Credit Finance Business Act regulates against the unfavorable treatment of consumers regarding reasons for using or denying the use of credit cards for transactions, regardless of the size of business.
In most cases, customers don’t seem to mind and are already prone to forking out an additional 10% fee for cheap items sold in these underground shopping malls. Instances of these declared earnings reports coming under investigation is rare, so there has been little public attention to the issue. According to the Credit Finance Association, in only the first half of last year, cases of avoiding reporting earnings reports exceeded 2,000. In 2010 there were 3,567 cases, in 2011 4,095 cases, and in 2012 4,863 cases. Even though this shows a steady increase, crackdowns on these situations still prove to be difficult.
The National Tax Service officials have said: “When paying by card, these surtaxes should be included in the total but when the taxes are added separately to provoke cash payments it can harm reported income reports.” They said further: “If this continues, it can make figuring out one’s income difficult for the citizens of Korea.” This official further advised: “For mistreated consumers who first submit to us a written price estimate along with the price difference of cash vs. credit cards, we will impose fines as much as the price-difference to the shops.”
Comments From Naver:
Such a clever trick! What? Cheap prices mean they can’t make any profit? That’s why I don’t wanna go to those underground shopping spots.
This situation is a pity, but nevertheless certainly illegal. Reminds me of the owners of the Noryangjin cup rice stalls.
Gotta pay your taxes. If you’re in business, that’s the way it is. tsk tsk.
At places that discriminate between card and cash payments, I’m 100% positive they could lower their prices.
(Seoul’s) Jamsil station subway mall is infamous for this kinda thing…
They purchase t-shirts cheaply at W1-2,000 and sell them for W20-30,000 apiece and then say there’s no profit? Jesus, how much do these weasels need to pocket? These guys are disgusting leeches.
This official further advised: “For mistreated consumers who first submit to us a written price estimate along with the price difference of cash vs. credit cards, we will impose fines as much as the price-difference to the shops.” That’s your “advice”? You’re asking, not wholesalers, but regular joes to get a written price estimate from the shopkeepers and bring them in? Looks like the officials don’t wanna get off their asses. No will to actually improve this situation…tsk tsk..
Business owners are lying if they say that there’s nothing left over for them at the end of the day. I also found myself in this kinda business. When selling handbags, we sold them at a 20x markup.
Wait, are they saying they can demand compensation for the loss if you’ve already gotten a written estimate? Next time you’re out shopping, you can ask for the estimate. And they’ll be sure to tell you to fuck off.
What’s with using your cards for only W30,000? Thanks to our cards, mindless impulse shoppers on the street have only increased.
Don’t you think the street clothing shops are notorious for this? They whine like this while driving expensive cars and clutching their luxury bags…all the while not wanting to pay their taxes. kkk
If you’re not turning a profit, close up shop, and go back to work.
In front of Busan University I found a knitted piece I liked at a clothing shop. When I went to buy it, it was W30,000, but when I paid by card it became W45,000…I was dumbfounded! Only when I told her I was ready to leave did the price drop to W35,000. What’s with these kinds of places?