Ending offshore tax evasion

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Ending offshore tax evasion

A collaboration among a German newspaper and a number of media outlets around the world has led to a bombshell revelation. According to a months-long analysis by German daily Süddeutsche and 107 other press organizations from 78 countries, circumstantial evidence suggests that major international figures, including 72 former and current state leaders, committed money-laundering and tax evasion after secretly transferring money abroad. Mossack Fonseca, Panama’s leading law firm specializing in legal and trust services, was involved in the process, the report said. The German newspaper and other media outlets have been delving into a whopping 11 million documents over the last few months.

The law firm’s clients included not only deposed dictators such as Muammar Gaddafi of Libya and Saddam Hussein of Iraq — both deceased — but also incumbent leaders like Mauricio Macri, President of Argentina, and Petro Poroshenko, President of Ukraine. Many of the current heads of state were billionaires in the past. The exposure is more shocking than an earlier one by the International Consortium of Investigative Journalists (ICIJ) in 2014 due to its longer list.

What attracts our attention is that Newstapa, a local Internet media outlet that joined in the collaboration, discovered the names of 195 Koreans. Newstapa did not disclose the total list of Koreans except reporting that Noh Jae-hun, a son of a former president, set up three ghost companies in the Virgin Islands, notorious for its popularity as a tax haven. But the sheer number of Korean individuals and companies hints at the strong possibility that they violated our foreign exchange transaction laws for offshore tax evasion.

This despicable practice does not only ridicule the principle of fair taxation, but has the effect of siphoning national wealth off overseas. It could serve as a convenient channel for illegitimate financial transactions via money laundering. The National Tax Service (NTS) collected 1.286 trillion won ($1.12 billion) — the largest amount ever— from 223 offshore tax dodgers last year. That figure has been increasing since 2012. That suggests the 195 tax cheaters are just the tip of an iceberg.

The NTS must quickly launch an investigation of Korean individuals and companies on the list. If their suspicions prove true, it must immediately start investigations with cooperation from their counterparts overseas. The NTS demonstrated a determination to root out offshore tax evasion. We hope the office brings all tax dodgers to justice.

JoongAng Ilbo, Apr. 5, Page 30
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