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Gov't to get tougher on offshore tax evasion

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(Globalpost/GlobalPost)

SEOUL, June 16 (Yonhap) -- The government will impose a tougher crackdown on offshore tax evaders and those who sneak their wealth out of the country by introducing tougher rules on cross-border foreign exchange transactions, the finance ministry said Sunday.

The move comes after a revelation by an independent online news outlet that several high-profile local businessmen were found to have set up paper companies in popular tax havens in an apparent bid to stash away funds or evade taxes.

The Ministry of Strategy and Finance said it is moving to rewrite the enforcement decree of the Foreign Exchange Transactions Act in order to prevent offshore tax evasion and overseas concealment of wealth.

The revised decree calls for the Korea Customs Service and the Financial Supervisory Service to ask each other for a joint investigation into suspected cases of offshore tax evasion and wealth transfers out of the country.

Currently, the customs office is commissioned to conduct a probe into law violations concerning export and import transactions, while the financial watchdog deals with breaches related to capital and service transactions.

The ministry also said that it will strengthen ex-post control on overseas direct investment by local companies in an effort to keep them from diverting funds.

There have been cases where local businessmen have purchased overseas properties with reported investment funds or used them for personal purposes.

According to government data, there has been a steady increase in the illegal outflow of capital for tax evasion or wealth concealment since Seoul lifted control on cross-border foreign exchange transactions in 1999.

Local foreign exchange authorities detected 202 tax evasion cases worth 825.8 billion won (US$733 million) last year, up sharply from 30 cases worth 150.3 billion won in 2008.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/130616/govt-get-tougher-offshore-tax-evasion