중앙데일리

Swiss accounts used to evade Korean tax

$1.6 billion has been invested in the Kospi and Kosdaq markets via Switzerland

June 16,2011
Korea’s tax agency revealed yesterday that it suspects secretive Swiss bank accounts are being used to launder Korean money by investing in Korean stocks.

Citing a high-ranking official at the National Tax Service, the Munhwa Ilbo reported yesterday that roughly 1.8 trillion won ($1.6 billion) has been invested in the Korean Kospi and Kosdaq markets via Switzerland.

This figure is roughly 45 percent of the 4 trillion won that was invested in the tech-heavy Kosdaq from Switzerland as of the end of last year.

The finding comes at a time when the Korean tax agency has been enhancing cooperation with other countries to clamp down on tax evasion.

“The Swiss tax agency recently returned 5.8 billion won in revenue it earned from a tax levied on dividends earned from investing in Korean-listed companies by non-Swiss residents earlier this year,” said the official.

It is the first time Korean authorities received such a refund.

The tax agency suspects between 1.1 trillion won and 1.8 trillion won was illegally moved to Switzerland, where it was reinvested in the Korean stock market.

There have been no information exchanges to date between Swiss and Korean tax officials.

Since the Swiss government strictly protects the identity of investors and account holders, it is impossible to verify the legality of the Swiss investments in Korean stocks.

The National Tax Service official said the cash was likely smuggled out of Korea without going through proper channels, most likely to evaded taxes.

The tax agency said it has been a common practice among tax evaders to set up paper companies in other countries particularly, tax in havens, to avoid being taxed by Korean authorities.

Switzerland has a reputation for being a place where wealthy investors from around the world can hide their fortunes, to keep them out of the reach of tax collectors.

Former Korean presidents are suspected of keeping secret accounts in the European country.

In the first three months of this year, the Korean tax authority has recouped tax revenue totaling 474.1 billion won after uncovering 41 illegal accounts held by Korean nationals overseas.

Last year, 500 billion won in unpaid taxes was recouped from overseas tax evaders.

To discourage offshore tax dodging, the government plans to update bilateral tax agreements with countries considered to be tax havens, including the Cayman Islands.


By Lee Ho-jeong [ojlee82@joongang.co.kr]



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