``National Tax Service`s Unreasonable Taxation Amounting to Tens of Billions``

The third trial of the former honorary president of the Dong-a Ilbo Kim Byong-Kwan and the former vice president Kim Byong-Gun, who were involved in the `press companies` tax penalty case`, was held at the criminal court 21 division (Park Yong-Kyoo, senior judge) in Seoul District yesterday.

Lee Hee-Jun, chief of the accountants` department of the Dong-a Ilbo, who attended as a defense witness said, ``The Dong-a Ilbo stock, which was registered as nominal trust in 1981, was the stock of which ownership was transferred from the late honorary president Kim Sang-Man to his grandson Kim Jae-Ho. However, the National Tax Service (NTS) made the confirmation document, which stated that the stock was owned by the former honorary president Kim Sang-Man, and forced the company to seal it in May right after the NTS launched tax investigation.`` ``I reluctantly stamped the seal of the company`s representative director because the NTS threatened to lay a tax amounting to 1 billion won per day if I do not seal.`` Lee stated.

Lee Jong-Wang, attorney of the former honorary president Kim Byong-Kwan, said, ``The NTS unreasonably imposed tax even though the stock was not subject to taxation since taxation prescription (10 years) was already passed as the stock, which was registered as nominal trust in 1981 and 1989, was owned by Kim Jae-Ho.``

Lee said, ``The NTS imposed tax based on the judgment that the nominal trust contract, which was written in 1981, was fake. However, it was verified by the Bar Association that the form, which was used as contract paper, was made in attorney`s office prior to 1981. The NTS unreasonably imposed an inheritance tax amounting to tens of billions by distorting the nominal trust contract, which was normally made, to the fake contract.``

Defense attorneys also stated, ``Kim Jae-Ho contributed 26,000 stocks to the Ilmin Foundation in 1994, but reluctantly took them back because the non-profit Ilmin Foundation had to pay billions of tax due to the revision of the inheritance tax in 1998. However, regarding this as donation, the NTS indicted him in charge of evasion of donation tax. It is unreasonable to apply the charge of evasion of inheritance tax to him because it was not in fact donation as he took back his own stocks due to the special circumstantial change.``

Mr. Kim of the NTS, a witness for the prosecution, said that ``an inspector asked me to receive the seal since he thought that it was not appropriate to meet the former honorary president Kim Byong-Kwan. However, I did not mention 1 billion won of taxation.``

The next trial is scheduled at 3pm on November 6th.

Lee Jung-Eun lightee@donga.com