Tax Man Goes After Koreans' Overseas Bank Accounts

      March 26, 2013 13:46

      Overseas bank accounts are increasingly used by lawyers and other highly paid professionals as well as wealthy businesspeople to evade taxes.

      According to the National Tax Service, one common method is to set up a paper company in a tax haven overseas and send profits made abroad into a bank account set up there. Individuals get clients overseas to make payments for their services into their foreign bank accounts.

      A crackdown has led to more people getting caught and having to pay back taxes. Since 2008, the NTS has uncovered 537 cases of tax evasion involving overseas accounts and charged W2.6 trillion (US$1=W1,114) in additional taxes.

      In 2008, there were only 30 instances and W150.3 billion in additional taxes collected, but last year that rose to 202 and W825.8 billion.

      But there are limits to the NTS' ability to track down all overseas accounts. In 2011, the government made it mandatory for Korean citizens or companies registered here to report any overseas bank account whose balance exceeds W1 billion.

      That year, only 211 individuals and 314 businesses reported a total of 5,231 overseas bank accounts containing a total of W11.5 trillion. Last year, the number rose to 302 individuals and 350 businesses and the amount to W18.6 trillion.

      However, the NTS believes this is merely the tip of the iceberg and many more overseas bank accounts are held by Koreans abroad.

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