According to the National Tax Service, a shipping magnate is under investigation by the prosecution on charges of offshore tax evasion. The case draws our attention because the fine imposed on him is 410.1 billion won, the largest ever levied on an individual for stashing away personal wealth abroad.
The NTS said the shipping tycoon, who is little known to the public, operates a fleet of 160 vessels whose value is estimated at around 10 trillion won. The tax office alleged that the businessman managed his business in Seoul but pretended to be non-resident to evade taxes.
To conceal his residence in Seoul, according to the NTS, he had his house registered under the name of a relative. In running the company, the tax office said, he took care not to leave any traces of business activities ― for instance, by only giving verbal instructions to employees and using USB flash drives to transfer data.
The NTS said the businessman set up scores of paper companies in offshore tax havens and transferred profits to secret bank accounts in Switzerland, the Cayman Islands and Hong Kong. It tracked down the accounts with the help of foreign tax agencies.
The tycoon, however, has reportedly denied the tax evasion allegations, saying that his company is based in Hong Kong and that he has been residing there since 2006. In Seoul, he said he stayed for less than 180 days a year to qualify for non-resident status.
Whether the businessman has evaded tax or not will be determined through the prosecution’s investigation. The NTS needs to cooperate with the prosecution and secure assistance from overseas tax authorities to prove the charges it has brought against the shipping magnate.
Earlier this year, the tax office declared it would raise tax revenue by cracking down on offshore tax evaders. It aims to collect a total of 1 trillion won this year from this new category of tax evaders. To attain this goal, it needs to step up scrutiny on domestic corporations that have established paper companies in overseas tax havens.