Individuals, firms asked to report overseas assets

The government asked companies and individuals to report their hidden overseas assets voluntarily during a grace period ending in March next year, a move to expand the tax base and strengthen taxation transparency.

Those who voluntarily come clean on their hidden overseas assets will be exempted from punishment during the grace period, the Ministry of Strategy and Finance said Tuesday.

“The government will implement the voluntary reporting system from Oct. 1 to March 31 not only to bring the underground, or shadow, economy into the open for taxation but also to spread the culture of honest tax payment,”Finance Minister Choi Kyung-hwan said in a joint press briefing on the bill which passed the National Assembly late last year.

If the voluntary program goes as planned, the government expects to collect about 500 billion won ($427 million) in additional tax revenue for this year, according to the finance ministry.

The move is part of the government’s efforts to fill the shortage of tax revenue. The tax authorities have stepped up the drive to collect as much tax income as possible to support the Park Geun-hye administration’s costly welfare policies.

For 2015, the National Tax Service said Tuesday it was targeting to collect 206.0 trillion won and achieved 49.6 percent of the plan at the end of June.

But the target figure was revised down from 210.1 trillion won as the finance ministry injected trillions of won to offset the shortage of the national tax income in extra spending in July.

In the joint press conference held at the Government Complex building in central Seoul attended by Justice Minister Kim Hyun-woong, Choi said, “the temporary program will allow those who have not reported their undisclosed overseas earnings to the tax agency and fulfill their duty.”

Korea benchmarked 15 advanced countries, including the U.S., Germany and France, to introduce the voluntary reporting program. The countries have successfully executed similar programs to fatten their tax coffers, the statement said.

“Those who voluntarily report their hidden offshore income for taxation will be exempted from penalties and exposure of their names to the public,” said Choi. “But if they are involved in felonies such as embezzlement, breach of duty or fraud, they will be punished despite their voluntary reporting.”

The finance minister sternly warned that the government will impose heavy taxes and penalties on those who fail to report their hidden offshore income during the period.

“No more opportunities will be given to correct their wrongdoings once the reporting period ends. No mercy will be shown to tax evaders,” Choi said.