Korea Tells Companies to Report Finances of Overseas Affiliates

Mary Swire, Tax-news.com, Hong Kong

04 April 2000

The Korean National Tax Service (NTS) has announced new reporting rules that will require local companies to report on the finances of their overseas affiliates.
Local companies owning at least 30% of the capital of an overseas afilliate will be required to provide financial statements for their overseas affiliates including credit sales, purchases, real estate ownership, and borrowings between affiliates and parent companies.

The official line of the Korean Government is that new reporting requirements are part of an information gathering exercise designed to assist in preparations for the de-regulation of Korea's foreign exchange market next year.

However the targetting of 200 Korean firms with affiliates in offshore tax havens by the NTS for audit this year suggests a secondary agenda aimed at uncovering offshore capital flight, asset hiding and tax evasion by Korean business.

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