hankyoreh

Tax havens

Around 36 trillion won (US$32 billion) in nine years was sent to tax havens as “direct investment” by South Korean corporations, a report shows.

An Oct. 30 analysis of overseas investment figures received from the National Tax Service, Bank of Korea, and Export-Import Bank of Korea by Democratic Party lawmaker and National Assembly Strategy and Finance Committee member Park Kwang-on showed a total of 36.113 trillion won (US$32.17 billion) directly invested by South Korean companies in tax havens like the Cayman Islands, the Virgin Islands, Bermuda, the Bahamas, and Liechtenstein between 2008 and last year, according to late September exchange rates. Direct investment refers to money used to establish local companies or factories and acquire real estate.

There is suspicion that corporate money may have been sent to tax havens in the guise of direct investment to conceal assets or avoid taxes. As countries or territories with no or very low corporate taxes, tax havens are used for tax evasion and money laundering purposes by global businesses, which route export earnings through them to convert them into foreign funds that are subsequently brought back into the country.

The amount of direct investment in tax havens by [South Korean] corporations rose by 3.6 times from 1.6191 trillion won (US$1.44 billion) in 2008 to 5.8367 trillion won (US$5.20 billion) last year; National Tax Service offshore tax evasion audits and penalties increased every year over the same period. Offshore tax audit penalties rose by 8.7 times from 30 cases and 150.6 billion won (US$134.1 million) in 2008 to 228 cases and 1.3072 trillion won (US$1.16 billion) in 2016.

“The National Tax Service needs to closely analyze the nature of direct investment funds going into tax havens and respond exhaustively to corporations’ clever methods of tax evasion,” Park Kwang-on said.

Generally

By Heo Seung, staff reporter

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