NTS to focus on paper companies being used to evade tax, hide money
The National Tax Service on Monday vowed to toughen its crackdown on offshore tax evasion by wealthy persons and large businesses as one of its priorities this year.
The tax authority said it will step up curbs on borrowed-name financial transactions often used by companies to manipulate their incomes. It will also enhance the inquiry into evasion of inheritance taxes related to transfer of management rights and the stashing of corporate assets in the form of a paper company abroad.
The agency on Monday made the Offshore Compliance and Enforcement Center, an ad hoc taskforce established in 2009, a permanent body.
“We also launched Crime Scene Investigation, a sub-group within the OCEC specializing in restoration of deleted transaction records and tracking of sophisticated derivative deals. The means of hiding wealth are becoming increasingly sophisticated,” Yoon Chang-bok, director at the agency’s Planning & Coordination Bureau told The Korea Herald.
The NTS Commissioner emphasized the crackdown on all tax offenders as a means of increasing sources of tax revenue.
“We will need to be disciplined and crack down on all tax offenders, especially among the affluent. We will also raise efficiency in information gathering to find new sources of tax,” Commissioner Lee Hyun-dong said, addressing more than 250 regional heads at the annual gathering of national tax officials on Monday.
The agency slapped fines totaling 2.77 trillion won ($2.49 billion) based more than 18,300 examinations conducted into individuals and businesses that tried to evade taxes last year.
The plan for this year is to concentrate more manpower and introduce new screening procedures for increased efficiency.
Establishing paper companies abroad, especially in Hong Kong, is a popular way to hide wealth and evade taxes where offenders use them to transfer export earnings to hide corporate assets.
The NTS has been in talks to exchange financial information with Switzerland, a traditionally popular banking destination for its tight confidentiality protection laws.
The agency plans to send more of its agents to the world’s financial clusters, including Hong Kong and Shanghai to gather information on tax evasion.
“Investigations into offshore tax evasion and audit requires expertise and close co-operation with tax authorities abroad. We are strengthening our information gathering system to clamp down tax offenders,” a NTS official said.
The Group of 20 finance ministers requested that Switzerland end the era of banking secrecy during its meeting in London last April. The country since then extended administrative services regarding tax evasion. UBS, the banking giant of Switzerland, handed over information on 4,450 clients to U.S. tax authorities in August 2009.
By Cynthia J. Kim (email@example.com