Recent figures released by Korea's National Taxation Service have revealed that last year US$8.9 billion was invested in Korea from territories that it classed as tax havens. Of this total, US$6.6 billion was said to have originated from Labuan, an offshore finance centre located off the Malaysian coast.

The NTS also said that US$1.6 billion was channelled into Korea from Bermuda, and US$700 million from the British Virgin Islands.

Earlier this month, the South Korean Ministry of Finance and Economy (MOFE) announced that it intends to supplement local laws and seek changes to double taxation treaties in order to prevent offshore-registered investment firms from avoiding local taxes. The proposals are due to go before the National Assembly later this year.

The Korean government reportedly intends to tax the capital gains of foreign funds that own more than a 25% stake in local firms, which, under current double taxation treaties, are exempt. Additionally, overseas-based funds that invest in Korean companies with more than 50% holdings in real estate which sell their stake in equities will be targeted.

The government's current crackdown began after the NTS accused a number of foreign investment fund firms, including Newbridge Capital, Carlyle Group, Lone Star Funds, Citigroup and the Government of Singapore Investment Corporation, of tax evasion relating to the proceeds of property sales.