South Korea: Penalty Tax for Offshore Tax Evasion Reached Record High in 2016

The National Tax Service (NTS) of South Korea collected the highest taxes from offshore tax evasion using tax havens last year, reports BusinessKorea.

According to the data from Congressman Park Myung-jae of the National Assembly Strategy and Finance Committee submitted by the NTS on September 24, a total of 1.31 trillion won (US$1.15 billion) of penalty taxes were collected from offshore tax evasion last year, reaching a record high.

The amount of offshore tax evasion increased from 150.3 billion won (US$132.48 million) in 2008 to 501.9 billion won (US$442.4 million) in 2010, 963.7 billion won (US$849.45 million) in 2011, 1.08 trillion won (US$951 million) in 2013, 1.22 trillion won (US$1.07 billion) in 2014, 1.29 trillion won (US$1.13 billion) in 2015 and 1.3 trillion won (US$1.15 billion) last year.

There are also more and more people who are disagreeing with investigation of the NTS. The rate of objection rose from 17.1 percent in 2013 to 18.6 percent in 2014, 22.9 percent in 2015 and 23.7 percent last year. Higher they receive penalty taxes, the more taxpayers raise objection.

Accordingly, the actual penalty taxes collected last year amounted to 1.07 trillion won (US$940.59 million). The figure slightly decreased from 1.12 trillion won (US$983.96 million) in 2015 for the penalty tax of 1.29 trillion won (US$1.13 billion).

Some points out that the NTS still shows a passive attitude, though offshore tax evasion gets more serious. In fact, only 99 taxpayers were charged with tax evasion from 2008 to last year, accounting for only 6.9 percent of the total cases. In 2016 alone, 11 out of 228 cases, or 4.8 percent, were charged with tax evasion.

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