Toy executive playing tax games

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Toy executive playing tax games

The CEO of a toy company concealed his property in a secret account under the name of a shell company in the British Virgin Islands to avoid inheritance tax for the $10 million that his father, the founder of the company, kept overseas, the Korea Customs Service (KCS) said yesterday.

The KCS said it caught the CEO concealing $12 million in an account under the name of an overseas shell company in August when he siphoned off?$2 million by manipulating export prices. The case will be sent to the Supreme Prosecutors’ Office for its hidden property, money laundering and undeclared foreign deposits worth 446.5 billion won ($416.5 million), according to the KCS.

In addition, the company will be fined 12 billion won for tax evasion and it will have to move the 42 million won in hidden funds to Korea. The KCS also plans to report the case to the National Tax Service

The KCS said the investigation that began in June is ongoing and the announcement yesterday included its preliminary results. The probe started after an independent journalism outlet, Newstapa, disclosed it had identified 182 Koreans with foreign exchange accounts in tax havens overseas.

The KCS said yesterday it has uncovered 40 companies involved in illegal foreign exchange transactions worth approximately 1.123 trillion won through tax havens like the British Virgin Islands.

The KCS said it has identified about 160 Koreans associated with the companies and estimated the amount of taxes owed at 100 billion won.

It also found that the more than 1 trillion won hidden overseas included 738.9 billion won in assets of 13 companies revealed by Newstapa and the hidden slush fund of the eldest son of former President Chun Doo-hwan.

The investigation is part of government efforts to crack down on the underground economy and overseas tax evasion.

According to the investigation, among the 40 companies involved in illegal foreign exchange transactions, five were caught transporting property worth 630.1 billion won through price manipulation, 11 with uncollected overseas export bonds worth 177.4 billion won, 18 with concealed brokerage commissions for shipping and steel worth 159.6 billion won and two hiding 30.1 billion won to evade customs.

The KCS said it first investigated 26 companies by analyzing the companies’ foreign exchange transactions, and 13 were found to have hidden 738.9 billion won in illegal foreign exchange transactions.

“As the special crackdown was conducted in close cooperation with related agencies like the Prosecutors’ Office, National Tax Service and Financial Supervisory Service, we expect it will contribute to legalizing the underground economy and establishing tax justice,” said a spokesman for KCS.

“We plan to continuously promote the tough crackdown and close monitoring of the outflow of national wealth by precisely determining whether the overseas corporations are shell companies and price or currency manipulators.”

BY KIM JUNG-YOON [kjy@joongang.co.kr]

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