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The National Tax Service building.
The National Tax Service building.

South Korea Sees Surge in Offshore Disclosures

South Korea Sees Surge in Offshore Disclosures

There was a substantial increase in disclosures by South Korean taxpayers about their overseas financial assets during the first six months of the year, South Korea’s tax agency has said.
Under the voluntary disclosure program, individuals and companies reporting undeclared overseas income and assets may be entitled to reduced penalties and are absolved from criminal law penalties, Yonhap reported.
According to the National Tax Service data, the number of taxpayers reporting undeclared offshore assets totaled 1,053 during the first six months of the year, a 27.5% rise over the 826 that reported holdings in the first half of 2015.
Assets disclosed reached KRW56.1 trillion ($50.4 billion), a year-on-year increase of KRW19.2 trillion. Most disclosures (KRW51.3 trillion) were from Korean companies.
Assets declared by individuals were predominantly situated in Singapore (KRW1.32 trillion), the United States (KRW1.29 trillion), and Hong Kong (KRW926 billion).
Companies had undeclared accounts mainly in Hong Kong (KRW16.5 trillion) and China (KRW6.2 trillion).
 Reimbursements
The amount of tax reimbursements more than doubled from a year earlier in 2015, apparently indicating excessive tax collection by officials out to improve their personal performances, a lawmaker said Thursday.
In 2015, the NTS was forced to reimburse 6.26 trillion won ($5.56 billion) in excess taxes, according to Rep. Kim Gwang-lim of the ruling Saenuri Party.
The 2015 tally marks a 106% spike from 3.04 trillion won in 2014, the lawmaker said, citing related data from the NTS. Kim currently sits on the parliamentary finance committee.
Unlike tax refunds, tax reimbursements represent amounts that should not have been collected in the first place.
“The amount of tax reimbursements appears to have increased as tax offices launch unnecessary tax probes and impose excessive taxes only based on the outcome of their investigations and without reviewing the lawfulness of their decisions,” Kim said.
A tax official noted such a practice remains widespread among tax officials as they are evaluated on the amount of taxes they impose and collect, and face little consequences even when the government later loses tax litigation cases involving their decisions.
In 2015, the amount of tax reimbursements made following legal complaints and disputes raised by taxpayers came to more than 5.2 trillion won, accounting for more than 83% of the total.
The amount voluntarily reimbursed by the tax office came to only 645 billion won, according to the lawmaker.

 

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