European chamber slapped with unprecedented 4.5 billion won tax bill

For the first time, the European non-profit business lobby group in Korea has been hit with a tax fine of 4.5 billion won ($3.9 million).

Both the National Tax Service (NTS) and the European Chamber of Commerce Korea (EUCCK) refused to make an official comment regarding the issue. However, according to industry sources, the European organization has been subjected to a tax probe since February.

The investigation came as a surprise as it was the first time the European organization has come under the scrutiny of the tax office since it was founded 26 years ago.

Questions arose about the motives behind the move.

The EUCCK claims it is not obligated to pay taxes as it is a nonprofit organization. But the NTS argues that even a nonprofit organization has to pay taxes, according to the law, when it starts turning a profit.

“Regardless of the nature of an organization, whether it be a nonprofit or profit-seeking entity, if there are signs of possible tax evasion, our motto is to investigate without exemption,” said an NTS official.

The EUCCK was investigated for the profits it made from advertisements placed on a monthly publication it issues.

The European business organization is reportedly making efforts to pay the fine. However, it is finding it difficult to collect the money as it exceeds the total sum it collects from its members each year. The agency has allegedly asked its members to pay their membership fees for next year ahead of time to help it foot the bill, and is also considering trimming down the organization. It currently represents 800 members.

By Lee Ho-jeong, Joo Kyung-don [ojlee82@joongang.co.kr]