According to a report in the Korean Times, South Korea's Ministry of Finance and Economy (MOFE) has approached the authorities in several of the largest offshore jurisdictions including Bermuda, the British Virgin Islands and the Cayman Islands, with a view to negotiating information exchange agreements.

Citing a MOFE official, the report stated that the Bermudian government has made a positive reply to Seoul's request, and is said to be reviewing the proposal.

"We plan to form at least one such agreement this year, but it won’t be easy as the disclosure of investor information threatens the existence of tax havens," the official was quoted as stating.

The news that South Korea is planning new bilateral arrangements with offshore jurisdictions comes as the government attempts to tighten its tax laws on several fronts to prevent foreign buyout funds from taking huge tax-free profits out of the country. This includes a plan to expand its network of bilateral double taxation treaties to jurisdictions that it considers as 'tax havens,' an ambitious proposal to renegotiate some of its existing bilateral double taxation agreements, and legislative amendments to tighten up its international tax laws.

In particular, Seoul has placed a high priority on reaching a new arrangement with Belgium, where a subsidiary of US fund Lone Star, will realise a 4 trillion won (US$4 billion) capital gain from its controversial sale of Lone Star's majority stake in Korea Exchange Bank.

South Korea has stopped short of designating Belgium a 'tax haven', but a cabinet meeting on Tuesday approved a proposal calling for an agreement between Korea and Belgium on investment promotion and guarantees. South Korea is also seeking new bilateral tax arrangements with Ireland and the Netherlands, and is very likely to designate the Malaysian island of Labuan a tax haven when an official list is published shortly.

On the legislative front, under an amendment due to come into effect on July 1, investors that have made gains in South Korea through holding companies located in territories officially designated as tax havens by the government will have to abide by South Korea's corporate tax rules.