Tax agency investigates Naver

Korea’s largest Internet portal site operator is being examined for possible tax problems amid an ongoing investigation over fair trade issues.
The National Tax Service said yesterday that it sent an investigative team to NHN Corp. to begin what it called part of “routine” procedures. NHN operates Korea’s largest Internet portal site Naver. This is the first time NHN has been investigated by the tax agency since it was founded in 1999. It is the second tax investigation for an Internet portal since Daum Communications was scrutinized in 2004, which led to a 1.38 billion won ($1.5 million) fine. The tax agency said that it does not have plans to investigate any other Internet portals.
Industry insiders, however, noted that the agency never says what prompts an investigation until it reports the results.
NHN said that it is complying with the investigation according to procedures and that it didn’t expect any problems, especially because it was recognized by the tax agency for being a sincere taxpayer two years ago. The investigation, it said, would take about three months.
Industry insiders, however, questioned the timing of the investigation, as it comes at the same time as the Fair Trade Commission’s investigation and before the presidential elections. The watchdog is currently investigating whether the three major portals Naver, Daum and Nate are a monopoly because their sales take up more than 80 percent of the Internet market. The stock market reacted sharply to the tax agency’s move. NHN shares dropped 3 percent yesterday to 144,400 won.

By Wohn Dong-hee Staff Writer [wohn@joongang.co.kr]