South Korea’s tax authority vowed to ratchet up its efforts to clamp down on major conglomerates’ illegal practices to avoid taxes.
National Tax Service (NTS) said on Tuesday it will focus its investigation to find out illegal inheritances by chaebols, or family-run business empires in Korea, through inheritance tax evasion and illicit financial transactions among affiliates. The tax authority is expected to target conglomerates that are alleged to have created fraud affiliates and borrowed-name stock accounts to avoid taxes.
The tax authority’s latest crackdown on corporations’ tax dodging practices follows the government’s move to levy taxes on any illegal inter-affiliate trade in major conglomerates.
The NTS in August already launched a taskforce team to clamp down on tax evasion by super-rich individuals and companies. It has so far uncovered 31 tax evasion cases involving internal trade in chaebols and has collected additional 10.7 billion won (9.9 million) in taxes.
“We have found many suspicious cases of tax evasion, so we have to probe more into the practices,” said an official at the authority. The task force team will run until the end of February 2018.
South Korean corporations where heirs hold a high stake were found to have allowed more internal transactions among affiliates, a preferred way for Korean chaebols to avoid inheritance taxes. Despite attempts by previous governments’ to put an end to the practice, it seems to be still prevalent among big corporations.
The new government under liberal President Moon Jae-in proposed to collect more taxes on the top-income bracket individuals and companies to improve redistribution and ease wealth inequalities.
By Chun Jung-hong and Lee Ha-yeon
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]