Posted September. 30, 2005 08:12,
The National Taxation Service (NTS) has charged five foreign funds, including the Lonestar and Carlyle funds, 214.8 billion won in penalty taxes after a tax investigation.
Moreover, some executives of these funds are expected to be prosecuted in accordance with the National Tax Violation Control Law.
The NTS said on September 29, We investigated six foreign funds starting in April and charged five funds 214.8 billion won in tax penalties after our investigation ended.
The five funds are reported to be Lonestar, Carlyle, Westbrook, Goldman Sachs, and AIG.
It is the first time that the NTS has investigated foreign funds.
The NTS said that it is considering prosecuting those who are involved in tax evasion.
According to the investigation results, the foreign funds were found to have taken advantage of tax havens and tax conventions or to have paid high interest to relevant overseas corporations in order to evade taxes.
Lonestar, a U.S.based company, founded Star Holdings in Belgium, and Star Holdings established Star Tower in Korea with 100 percent investment.
Lonestar had Star Tower purchase the Star Tower building in the Gangnam area of Seoul in 2001 for 600 billion won and sold the shares of Star Tower to GIC RE, earning 260 billion won in profits. The NTS judged that Lonestar involved Star Holdings, a Belgian company, in an effort to utilize Belgium as a tax haven.
It is because the ROK-U.S. tax convention allows taxation on the profits from selling the share of a company with excessive possession of real estate while the ROK-Belgium convention does not.
The NTS said, As Star Holdings is a conduit company, the headquarters of Lonestar in the U.S. is the subject of taxation.