By Oh Young-jin
Korea will step up efforts to crack down on offshore tax evasion, especially involving corporate slush funds, next year.
The National Tax Service (NTS) will disclose a plan to find tax dodging overseas _ which will increase money collected by three times from this year to 1 trillion won, tax officials said Sunday _ to President Lee Myung-bak, Tuesday.
The plan comes at a time when cases of corporate offshore tax evasion are seen as a debilitating factor in strengthening the economy. For example, Hyosung Group has faced intense investigations regarding various allegations, while Hyundai Group is also facing suspicions for a loan from a French bank that is a key part of the payment for the purchase of Hyundai Engineering and Construction.
The plan focuses on ferreting out overseas corporate and individual slush funds and levying hefty punishment against those involved. For example, a high punitive tax will be slapped on those who fail to report overseas accounts holding 1 billion won even for transfers. Plus, the emphasis of regular corporate tax audits, which are conducted every four or five years, will be shifted to checking suspicions regarding overseas slush funds.
In addition, a taskforce will be made part of the permanent NTS apparatus and empowered to go after overseas tax evaders, officials said. Already intra-government consensus has been reached for the organizational transformation.
At the same time, special NTS agents will be sent to so-called tax havens and global financial hubs that are often used as bases to divert corporate and individual funds for tax evasion purposes.
Up to 15 destinations have been picked for agent dispatches, including Hong Kong and three other financial hubs; Shanghai and five cities that are home to an increasing number of Korean firms and five others where Koreans are concentrated.
A tax official will be attached to the Korean Embassy in Vietnam and another nation where a growing number of Koreans do business. Currently tax officials are attached to six nations, and their role in tax “intelligence” gathering will be strengthened.
Officials said that cooperation with other countries to find and tax those who fail to report and pay taxes will be strengthened by establishing bilateral accords.
The NTS also plans to actively participate in a joint study and investigation with OECD member countries. Especially, the NTS plans to add a clause in its tax treaty with Switzerland that enables exchange of tax-related information.
About 6 billion won has been earmarked for the NTS in next year’s budget for the exclusive purpose of finding additional untaxed sources of income. This year, the tax officials found a total of 624 billion won in unreported overseas income and collected 339 billion won in additional tax.
Foolsdie5@koreatimes.co.kr
Korea will step up efforts to crack down on offshore tax evasion, especially involving corporate slush funds, next year.
The National Tax Service (NTS) will disclose a plan to find tax dodging overseas _ which will increase money collected by three times from this year to 1 trillion won, tax officials said Sunday _ to President Lee Myung-bak, Tuesday.
The plan comes at a time when cases of corporate offshore tax evasion are seen as a debilitating factor in strengthening the economy. For example, Hyosung Group has faced intense investigations regarding various allegations, while Hyundai Group is also facing suspicions for a loan from a French bank that is a key part of the payment for the purchase of Hyundai Engineering and Construction.
The plan focuses on ferreting out overseas corporate and individual slush funds and levying hefty punishment against those involved. For example, a high punitive tax will be slapped on those who fail to report overseas accounts holding 1 billion won even for transfers. Plus, the emphasis of regular corporate tax audits, which are conducted every four or five years, will be shifted to checking suspicions regarding overseas slush funds.
In addition, a taskforce will be made part of the permanent NTS apparatus and empowered to go after overseas tax evaders, officials said. Already intra-government consensus has been reached for the organizational transformation.
At the same time, special NTS agents will be sent to so-called tax havens and global financial hubs that are often used as bases to divert corporate and individual funds for tax evasion purposes.
Up to 15 destinations have been picked for agent dispatches, including Hong Kong and three other financial hubs; Shanghai and five cities that are home to an increasing number of Korean firms and five others where Koreans are concentrated.
A tax official will be attached to the Korean Embassy in Vietnam and another nation where a growing number of Koreans do business. Currently tax officials are attached to six nations, and their role in tax “intelligence” gathering will be strengthened.
Officials said that cooperation with other countries to find and tax those who fail to report and pay taxes will be strengthened by establishing bilateral accords.
The NTS also plans to actively participate in a joint study and investigation with OECD member countries. Especially, the NTS plans to add a clause in its tax treaty with Switzerland that enables exchange of tax-related information.
About 6 billion won has been earmarked for the NTS in next year’s budget for the exclusive purpose of finding additional untaxed sources of income. This year, the tax officials found a total of 624 billion won in unreported overseas income and collected 339 billion won in additional tax.
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