Tax authorities are investigating Seoul branch of UBS over alleged tax evasion, sources said Wednesday.
According to industry insiders, the Seoul Regional Tax Office has been investigating the Swiss-based financial organization since late 2013 for allegedly doctoring derivative securities transaction records and conducting illegal transfers that generated 51 billion won of unreported profits. UBS Seoul is also suspected of faking a loss through earlier settlements on derivatives with offshore companies and creating artificial transfers of Korean treasury bonds to overseas branches to duck withholding taxes.
UBS said the investigation is a regular one. “UBS seoul branch is under regular tax inspection as the last audit was conducted in 2007. Statutory period is five years. The inspection period is scheduled for three months and the bank is diligently supporting the investigation and there has not been any specific allegation," it stated.
The investigation into UBS comes amid the Korean government’s ever-tightened monitoring on foreign financial institutions.
Last year alone, two noted stock brokers, Credit Suisse and Merrill Lynch, were slapped with a cumulative 65 billion won fine. SC Korea was also ruled a 59 billion won fine last year but has appealed to the Tax Tribunal.
The financial authorities are also reportedly planning to look into additional foreign banks in Seoul for their transparency, sources said.
“The government is keen to find new sources that can fill up the tax revenue,” a market insider said.
By Bae Ji-sook (email@example.com)