Tax authority collects 743.8 bil. won from offshore evaders in 1st half

Company “A,” a conglomerate, borrowed tens of millions of dollars in the name of its overseas subsidiary in the mid-1990s. It lent the money to a paper company established in a tax haven. The company is required to record the money as loans, but disguised it as account receivables. Then, it recorded the money as loss, saying that it was impossible to collect. The entire fund that was parked in the paper company was used to purchase stock in Korea. The company failed to pay corporate tax for the gains from sell-off of the shares, and the amount of income amounts to hundreds of millions of dollars.

The amount of income that conglomerates and high net-wealth individuals illicitly pocketed and failed to pay tax amounted to 750 billion won (699 million U.S. dollars) in this year’s first half, according to the tax authority.

The National Tax Service said on Monday it collected 743.8 billion won (693 million dollars) by investigating 377 cases of illicit tax evasions by conglomerates and well-heeled individuals. The amount of tax collected amounted to 1.97 billion won (1.84 million dollars) per case. The National Tax Service expanded its investigation into illegal tax evasions by high net-wealth individuals, and announced them collectively together with illicit cases committed by conglomerates, in which they funneled corporate funds, and malignly used the fund to inherit or transfer wealth. The tax authority took the measure because illicit inheritance and wealth transfer practices committed within conglomerates are done through business owners, who are high net-wealth individuals.

The per-case amount of tax collected for tax evasions by rich individuals has been on the rise. The amount of extra tax collected, which had declined since the global financial crisis in 2008, increased from 1.31 billion won (1.22 million dollars) in 2011 to 1.45 billion won (1.35 million dollars) last year. This suggests the tax authority has beefed up its scrutiny into tax dodgers.