Korean companies doing business with corporations based in tax havens will face disadvantages under an agreement by the Organization for Economic Cooperation and Development including the withholding of corporate tax deductions. Also, the government plans to drastically strengthen measures to tax profits made in Korea by companies based in tax havens.
A Ministry of Strategy and Finance official on Thursday said, "Concrete sanctions were prepared targeting tax havens during high-level talks on Tuesday among ministers of 20 OECD countries." He added, "Member countries, including Korea, will begin revising regulations as early as the second half of this year to implement the sanctions." Tax havens are countries like the Bermudas, Panama and the Bahamas without or with extremely low taxes.
At the meeting, OECD member countries decided not to offer corporate tax deductions to domestic companies that make various payments to businesses based in so-called "non-cooperative regions," which are tax havens that do not abide by OECD standards of transparency in terms of taxation. There are 82 tax havens around the world.