Unlisted subsidiaries of Korea’s leading family-controlled conglomerates depend heavily on international trading for their sales, data showed Monday, raising concerns over conglomerates’ attempts to transfer wealth and dodge taxes.
Twenty unlisted firms, whose biggest shareholders are the heirs of the group owners, saw their combined sales from internal transactions reach 3.42 trillion won ($3.1 billion), 46.1 percent of total sales as of end-December, according to the data by the Financial Supervisory Service and Chaebul.com, a conglomerate research firm.
The figure compares with the average internal transaction rate of 28 percent for all listed and unlisted subsidiaries of the country’s top 30 conglomerates, the data showed.
The high internal trading rate for their unlisted units is raising doubts that conglomerates placed large sums of orders with unlisted firms whose main stakeholders are conglomerate heirs.
Their unlisted firms have long been criticized as a means of illegal wealth inheritance since most of their stakes are held by conglomerate family members and their corporate information is usually undisclosed to the public.
In a bid to counter such moves, the government unveiled a set of measures to establish taxation justice late last month.
Finance Minister Yoon Jeung-hyun had said the government will beef up its crackdown on tax evasion, particularly among high-income earners, and mull on imposing additional taxes to conglomerates who attempt to dodge taxes by giving privileges to their affiliates.