Definition
In Korea, acquisition tax (chwideuk-se) is a local tax you pay once, at the moment a type of property defined by law (real estate, vehicles, ships, memberships, and so on) becomes yours. It doesn't fund the national budget. It goes to the local government where the property is located (for a car, where you register it). You pay it when you buy, and also when you inherit something or receive it as a gift.
The name tag that goes on the moment it's yours
Remember putting name labels on your gym shoes or pencil case at the start of a school year? The moment the label goes on, everyone can see the thing is yours. You put the label on once, when the item comes into your hands. You don't relabel it every time you use it.
Property that the law lists, like houses and cars, has a name tag too. But here the name tag isn't the act of writing your name in a record. It's the moment the property actually becomes yours. Your ownership then gets entered into an official record kept by the registry office or your city, county, or district office (the property register or the vehicle registry), so anyone can check who the owner is.
Acquisition tax is the tax you pay once, at the moment the name tag changes to your name. Korean tax law treats you as having acquired the property on the day you pay the final installment, even if you haven't registered it yet. That day is your name-tag day. If you registered before paying the final installment, the registration day counts instead.
How is the name-tag price set?
The price isn't the same for every kind of property. The more valuable the property, the more you pay. It's calculated by multiplying the price you acquired the property for by a set rate.
For example, say you buy a home for 500 million won (about $370,000) and the rate that applies is 1%. The name-tag price is 5 million won (about $3,700). The rate changes depending on the price bracket and how many homes you already own. Rates for stores or land are generally higher than the basic rate for buying a single home.
A few smaller taxes come along with it. So the money that actually leaves your bank account is a bit more than the calculated amount. That's why the cost of buying a home ends up bigger than the sticker price.
The later you file and pay, the more you owe. For real estate, you have to report and pay on your own within 60 days of the day you pay the final installment. Miss that deadline and extra charges get added.
A bit more precisely
You pay the name-tag price just once, when the tag goes on. There's a separate tax you pay every year while you live in or hold the home, and another separate tax on any profit when you sell it later. The three come due at different points in time.
Also, the tag doesn't change hands only when you pay money. If you inherit something from your parents or get it as a gift, and the owner becomes you, you still pay acquisition tax. The test is not whether you paid for it, but whether you newly came to own it. That's why you also pay acquisition tax when you build a new building and become its first owner.
So acquisition tax has nothing to do with how long you've owned the property or whether its value went up in the meantime. It only looks at that single moment when the name tag changes to your name. The money collected goes to local needs, like fixing roads and opening libraries in the area where you live.
Common misconceptions
You only pay acquisition tax once you register the property.
Even before you register, the tax arises on the day you pay the final installment (or the registration day, if you registered earlier). Putting off registration doesn't put off the tax, and missing the deadline adds extra charges.
Acquisition tax is only for buying a house.
It also applies to property whose owner is recorded in an official register, like cars, heavy equipment, and memberships. And you owe it when you inherit something or receive it as a gift.
Where you meet it
After you pay the final installment on an apartment, you have to report and pay acquisition tax on top of the price of the home.
You also owe acquisition tax when a family member passes a car down to you and the name on the registration changes, or when you build a new building.
In one sentence
When the name tag on a piece of property changes to your name, you pay a local tax once, based on its value, and the money goes to your local community.