Korea investment in tax havens hits 25 tln won in past 7 years
Korean companies and individuals have invested more than 25 trillion won (about $23 billion) in 50 tax haven countries over the past seven years, according to a report submitted Sunday by the National Tax Service (NTS) to the National Assembly.
“Investments by small-and medium-sized companies and individuals are in decline but investments by large conglomerates continued to rise,” Oh Jae-se, a member of the National Assembly’s Strategy and Finance Committee, said in a statement.
He said there should be a higher level of monitoring to counter possible attempts by big companies to hide their assets and evade taxes in tax havens such as the Cayman Islands, the Virgin Islands and Bermuda.
A tax haven is a country that exempts foreign investors who hold bank accounts or set up companies within its territory from paying taxes.
From 2007 to 2013,
Korean companies and individuals made a direct investment worth 25.23 trillion won ($22.78 billion) in 50 tax havens. Large conglomerates took the lion’s share of 80 percent, or 20.07 trillion won, and small-and medium-sized firms accounted for 9.6 percent, or 2.48 trillion won, showed data submitted separately by the NTS and the Export-Import Bank of Korea.
When it comes to annual investments in tax havens, the value continued to rise to 5.42 trillion won in 2013, more than tripling from 1.69 trillion won in 2007, according to the statement.
“As companies invest more in tax havens, the national tax agency has collected more in penalty taxes from companies which turned out to have made tax-evasion attempts,” said Oh who is a member of the main opposition New Politics Alliance for Democracy.
He asked the tax authorities to strengthen monitoring and inspections against possible attempts at tax-evasion by companies as capital flight often leads to tax evasion. The authorities have stepped up their drive to collect taxes in order to help support the government’s costly welfare programs since President Park Geun-hye took office in February last year.
Tax penalties issued to companies that attempted tax evasion jumped to 1.079 trillion won last year from 150 billion won in 2008, the statement said.
Investments in tax havens accounted for 13 percent of the country’s overall overseas investment valued at 197.89 trillion won during the same period, also according to the statement.
