In an effort to uncover hidden tax revenues, the Korea Customs Service will ramp up its tariff audit on luxury goods imports this year, officials said.

Items subject to the change are mostly designer clothes, bags and cars ― imported by the Korean branches of multinational companies.

“We will expand the range of subject companies from 80 to 130 this year, in order to raise tax revenues and to back the new administration’s financial needs,” said a KCS official last week.

The amount raised by detecting evaded taxes and imposing penalties on the importers last year totaled 60 billion won ($55 million), according to the KCS.

The selected 130 companies are to receive additional inspections on the propriety of their tax assessment and on their compliance with import-related regulations.

The corresponding companies are relatively prone to tax evasion as the price of their individual goods is high, the official explained.

“These firms take up only 30 percent in terms of import quantity but up to 70 percent when it comes to tax revenues,” he said.

“We especially focus on branch offices of multinational enterprises with overseas head offices, as the two may collude to make false price reports.”

He cited as an example a multinational apparel company which he said, in cooperation with its head office, falsely slashed the import price of its items and included the margin amount, some 37 billion won, in non-tariff categories. The KCS imposed an additional tax of 8 billion won in the case, officials said.

“Recently, the tax-evading companies have tended to disguise their import purchase prices as non-tariff items such as service costs or brokerage fees,” said the official.

“In order to detect these violations, we will intensify the monitoring processes on the luxury goods imports.”

To support its increased work load, the KCS also reinforced its manpower to 10 teams from six and plans to dispatch some 400 inspecting officials to its regional offices.

Also, a special task force is to be installed in the Seoul and Busan customs offices to monitor the general import trend of multinational companies here.

By Bae Hyun-jung (tellme@heraldcorp.com)