Korean Companies Hiding Capital in Int`l Tax Havens

The National Tax Service yesterday said around five Korean companies have hidden corporate capital in European tax shelters such as Liechtenstein, Switzerland and Luxemburg.

Tax officials have asked authorities in Germany, Switzerland and Luxemburg to provide information on the five companies.

German tax authorities were asked to provide data on the secret accounts of Korean companies hiding capital in Liechtenstein. A Korean tax official said his office hopes to find slush funds since Germany has obtained all available information on secret accounts held in Liechtenstein’s banks early this year.

Seoul is also negotiating with member nations of the Organization for Economic Cooperation and Development including Switzerland and Luxemburg, which are well-known for allowing foreign companies to create secret accounts, to get information on Korean companies’ secret accounts.

The pace of the audit accelerated after National Tax Service Commissioner Han Sang-ryul held talks with Florian Scheurle, director general of the German Federal Ministry of Finance, at an OECD finance ministers meeting in Paris in October.

A Korean tax official also visited Germany’s tax agency to discuss which companies will be subject to the audit.

A senior government official said, “Only a small amount of slush funds have been found belonging to Korean companies. We could, however, find secret money of politicians and slush funds of Korean companies created for use in lobbying activities.”

Tax officials will negotiate with the Strategy and Finance Ministry to encourage companies with hidden capital in international tax havens to bring their money into Korea. One tax official said that if the money hoarded in tax havens is brought into Korea, it will stabilize the won-dollar exchange rate.