NTS to strengthen control over illegal outflow of foreign exchange

Ahead of the implementation of the second-stage liberalization of foreign exchange transactions set for next year, the National Tax Service (NTS) has embarked on a full-scale investigation into efforts to stash foreign currencies. The NTS said Wednesday that with the liberalization, the individual ceiling for foreign-currency remittances will be abolished and people will be free to send as much money to foreign countries as they wish.

But officials said that in cases where people are suspected of hiding away large amounts of money abroad by illegal means, they will trace the source of the funds and impose heavy taxes. The NTS is keeping a particularly close eye on wealthy people as it is getting an increasing number of tips that the rich are sending away huge amounts of money to foreign countries in the name of overseas school fees.

The NTS said that it has fostered about 200 international investigators for its effort from two years ago. These investigators are carefully examining data taken from the Bank of Korea and the Korea Export-Import Bank. They are holding investigations into local companies with affiliates in internationally renowned tax heavens to find out whether they evaded taxes in the process of exporting and importing goods. Reports have it that some companies established bogus companies in these cities to send away money. According to the Organization for Economic Cooperation and Development, there are 35 tax haven countries in the Caribbean, Monaco and South Pacific Rim regions.