NTS casts larger net to catch tax cheatersA major conglomerate was found to have made stock investments with tax-free money hidden in an overseas tax haven. For decades, the conglomerate dodged paying taxes by creating a shell company and transferring several billion won as accounts receivable. which is money owed by customers for a product or service. Then the conglomerate claimed it as unretrievable. It then used the money to buy stocks in local markets, hiding the profits from the overseas stock exchange.
Also, a major real estate developer tried to dodge taxes by purchasing an insolvent company. After taking over the nearly bankrupt company, the owner handed down the stock to his grandchildren at a cheap price. After the acquired company made profits from a development project, the value of the stock rose, therefore increasing the grandchildren’s wealth.
These are just two examples of tax evasion perpetrated by conglomerates. The National Tax Service (NTS) yesterday said conglomerates that dodged their dues in the first half of the year paid 743.8 billion won ($693.7 million) in penalties and taxes. It said it has looked into 377 cases of possible tax evasion by businesses with assets over 50 billion won. Since the beginning of the year, the tax agency has been raiding major conglomerates ranging from CJ Group to Hyosung for possible tax evasion.
Since taking office in February, the Park Geun-hye administration has been strongly voicing its implementation of economic democratization, rooting out underground economic acts including tax evasion, and increasing its welfare funding.
To meet all three promises, the NTS has stepped up its tax audits. The tax agency also reported that it has collected nearly 5 trillion won from tax-dodging conglomerates since 2008.
The tax agency said it will further clamp down on conglomerates that have avoided paying their proper dues through illegal means.
“The act of tax evasion by society leaders such as the conglomerates not only could make the public feel at a loss [for paying their taxes accordingly], but it also could hurt in creating the mood for sincere tax filings,” an NTS official said. The investigation of tax dodgers is expected to intensify once the revised regulations on the Financial Intelligence Unit (FIU) take effect in November. Previously, regulators were only allowed access to personal financial data. Now, the tax authority can tap into the FIU for more detailed investigations.
BY LEE HO-JEONG [email@example.com]