NTS tracks down evaders

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NTS tracks down evaders

An owner of a manufacturing company created several overseas affiliates through complicated processes and purchased stocks of his own company here in Korea. The owner controlled his company through the acquired stocks from his overseas offices and deposited dividends received from the company in offshore accounts opened under the overseas affiliates to avoid taxes on the dividends.

In another case, an alleged tax evader created a paper company in a tax haven and avoided taxes on earned income he received from a foreign company through his paper company’s offshore account. He also hid income he made from selling overseas real estate at his paper company.

Another owner of a local company created a paper company at a tax haven and dodged taxes on proceeds from the sale of his overseas operation.

These were just a few of the cases the National Tax Service (NTS) tracked down this month.

The NTS said yesterday it has started tax audits on 17 people who hid personal wealth in offshore accounts. They are among 175 people who reportedly have large offshore accounts, but have failed to report them to the tax authority this month. The tax agency said it has notified 158 to report their offshore accounts by the end of June while thoroughly investigating if there is any hidden personal wealth.

Those with overseas accounts exceeding 1 billion won ($981 million) have to report them to the tax authority in June. The NTS said it tracked down the 175 people using collected data and the tax integration system (TIS).

The tax agency said it plans to not only levy taxes on the dodged amount, but publicly list names of the dodgers and the details of the illicit acts and turn the information over to prosecutors for criminal charges when the accounts exceed 5 billion won.

Under current law, a 10 percent penalty is applied to offshore accounts that exceed 5 billion won and individuals are subject to a maximum of two years in prison.

“We will try to minimize our interference by strictly protecting the secrecy of those who [voluntarily] report their offshore accounts this month while giving them the opportunity to explain any misunderstandings,” said an NTS official. “However, at the same time we will tenaciously hunt down those who tried to intentionally dodge taxes through offshore accounts.”

The voluntary reporting of offshore accounts was introduced at the end of 2010. Since then, the number of people caught dodging taxes has been increasing. In 2011 there were 525 people, and 678 last year.

By lee ho-jeong [ojlee82@joongang.co.kr]

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