Tax cheat travel ban strengthened

Tax dodgers could be banned from traveling abroad or jailed for as long as 30 days if recent proposals are enacted.

The Ministry of Economy and Finance, the National Tax Service, the Ministry of Justice and the Ministry of the Interior and Safety on Wednesday held a meeting where they agreed to step up penalties on repeated tax offenders who live the high life, financed with tax evasion.

Under the current law, the government cannot bar a person who has not been issued a passport from traveling abroad. So tax dodgers without a travel document yet can apply for one and leave before the travel ban paperwork has been completed.

The intention is to close that loophole.

Under the proposed measures, even if the person does not currently hold a passport, they could be legally banned from traveling abroad if they owe the government more than 50 million won ($42,540) in taxes or if the possibility exists that they will move their wealth offshore or escape to a foreign country.

The government also plans to adopt a system next year that will hold repeated tax offenders who have the ability to pay taxes but fail to do so, in prison for as long as 30 days.

Proposed conditions are a failure to pay taxes three times and total back taxes of 100 million won or more. To minimize potential abuses of the rule, the government will give the accused a chance to clarify the reasons for nonpayment.

The government will extend investigations of frequent tax evaders with more than 50 million won in back taxes to spouses and other relatives.

The current law only allows the government to look into the financial records of the person suspected of committing the offense.

Recent investigations have found many of the tax offenders have been hiding their personal wealth using the names of relatives, such as borrowing the name of their daughter-in-law to register high-end cars or luxury apartments or putting their personal wealth in bank accounts under the name of another family member.

Those who help tax dodgers will also face possible criminal penalties.

The Korea Customs Service will create a tracking system that will closely monitor the overseas purchases of people who are on the government’s list of tax evaders. The system will stop suspected offenders from making purchases with other people’s names.

Health and welfare benefits of tax evaders could also be reduced.

“As there is public indignation over malicious tax offenders who hide their wealth while enjoying welfare benefits, in addition to the measures that were announced today, the government will also strengthen administrative actions,” said Lee Eun-hang, the National Tax Service vice commissioner.

Welfare benefits of tax evaders will be clawed back, while those who have taken advantage of programs designed for the poor could be fined up to 10 million won or be imprisoned for up to a year.

Automobile taxes are also being targeted. Legal grounds will be created for denying driver’s licenses for repeat offenders. About 115,000 people, or 0.71 of automobile tax payers, could be in violation of that rule, if passed.

The relative departments will be working on the crafting of the reform bill this year so that these changes can be put into effect as early as next year.

BY LEE HO-JEONG [lee.hojeong@joongangco.kr]