South Korean authorities broaden the tax base

31.08.2012

National Tax Service of the Republic continues to strengthen tax State policy by expanding the tax base.

However, according to the government position the expansion of the tax base should not be at the expense of higher rates or imposition  new taxes, but at the expanse of  more accurate tax compliance: all tax Residents of South Korea are required to report about all foreign bank accounts  otherwise they will be charged penalties.

According to IRS estimates most accounts of Korean residents are in Swiss banks. That is why  a new agreement on the exchange of tax information between the two countries was signed. It entered into force in July 25, 2012.

The main purpose of the agreement is  increasing the level of cooperation in the tax area and the new opportunity for South Korean authorities to force residents to report their accounts abroad.

Expert’s opinion

"Despite the South Korean breakthrough in the global business and its success in the development area, the economy of this country is based on clan relations. Every world-known brand is always leaded and managed by groups of people the most frequently  families .It is like the sort of business principalities operated by independent dukes. The fact that the government of South Korea (the supreme overlord) officially, through the mouth of its tax service, has indicated its interest to the money which roaming uncontrolled  outside Metropolis is a sign.  Does it Indicate that the  paradigm of relations inside South Korea  has changed or is it just the repartition  spheres of influence of clans we will know soon. But in any case it is quite difficult for foreigners to do business in South Korea and work with Koreans.

If the IRS does tighten the screws  it will be a possibility that Korean capital will look for a new resident. For people who are familiar with the mentality of Koreans and who are  ready to offer them interesting projects  there is a great opportunity to attract huge Investments in joint ventures. Especially innovative technology, investment in invention will be in-demand.

We will monitor the  developments in this area".

On the basis: http://www.tax-news.com/news/South_Koreans_Declare_Their_Offshore_Accounts__ __57070.html

Yaroslav Lomakin ( Managing Partner Honest & Bright Company Ltd)