The tax agency said Monday it started investigating changes in foreign investors’ stakes and nationality in 4,889 companies in which foreigners held shares as of the end of 2004.

The investigation targets companies where foreign investors’ stakes account for more than 10 percent or more than W50 million (US$50,000) and which are eligible for benefits under the Foreign Investment Promotion Act. Some 107 tax offices nationwide started checking foreign-owned companies in their areas.

The probe aims to ferret out companies that are not entitled to tax benefits offered to foreign-invested companies. A fully fledged tax probe will follow if the investigation uncovers evidence of tax evasion. The NTS is already investigating Newbridge Capital, the U.S.-based investment fund that made W1.15 trillion in profits from selling its stake in Korea First Bank in April last year.

The firm applied for tax exemption from the NTS last May saying it acquired and sold KFB via a company based in Labuan, Malaysia, with which Korea has a double taxation treaty.

The NTS is particularly keen to tax the offshore investment firm Lone Star on the estimated at W4.25 trillion it stands to make from selling its stake in Korea Exchange Bank. “If Lone Star wants to get out of Korea, it must pay taxes,” a high-ranking NTS official said.

The NTS earlier said it will investigate possible tax evasion by visiting productions of musicals, operas and concerts and started to look at 8,272 performances by overseas artists in the country from July 2003 to the end of 2005.

(englishnews@chosun.com )