# South Korean tax arrears and collection efforts > Live situation record from CLSTR: https://clstr.news/situations/south-korean-tax-arrears-and-collection-efforts > Updated: 2026-10-10T23:00:03.000Z. Sources: 4. Developments: 2. South Korea is facing a significant challenge with tax arrears, which surpassed 116 trillion won as of June, involving approximately 5.64 million delinquency cases. Value-added tax (VAT) constitutes the largest portion of unpaid taxes at 33.4 trillion won, followed by income tax and capital gains tax. Late payment penalties have also risen sharply, with penalties for payments made after tax office notices increasing nearly 3.8 times between 2021 and 2025. In response to these systemic issues, local governments have implemented proactive recovery measures. In Suncheon, officials utilized real estate public auction distribution details to recover an additional 650 million won, bringing a total collection to 1.359 billion won. In Gangnam, authorities recovered 1.419 billion won by applying ‘material tax liability’ to assets transferred to trust companies to avoid seizure. Gangnam officials are now seeking to standardize these methods and propose institutional reforms to require trust companies to notify local governments before selling entrusted real estate. ## Timeline ### 2026-10-10: South Korea tax arrears exceed 116 trillion won South Korea's national tax arrears have exceeded 116 trillion won, with value-added tax being the largest component. Late payment penalties have also surged, reflecting ongoing domestic economic challenges. 2 sources. https://clstr.news/cluster/south-korea-tax-arrears-exceed-116-trillion-won ### 2026-10-05: South Korean local governments recover significant tax arrears South Korean local governments in Suncheon and Gangnam have recovered billions of won in unpaid taxes by targeting real estate auction dividends and navigating complex property trust structures. 2 sources. https://clstr.news/cluster/south-korean-local-governments-recover-significant-tax-arrears --- Cite as: South Korean tax arrears and collection efforts. CLSTR, https://clstr.news/situations/south-korean-tax-arrears-and-collection-efforts