Korean Tax Service Denies That Foreign Firms Are Under Suspicion

by Mary Swire, Tax-News.com, Hong Kong

05 July 2005

Korea's National Tax Service has denied reports that 137 foreign companies are under investigation for suspected evasion of corporate and other income taxes.

According to a report in the Korean newspaper JoongAng Ilbo, an official from the NTS revealed that the tax agency had discovered a number of discrepancies in the income tax declarations of 137 foreign firms made in March. Among those firms, 70 companies were alleged to have failed to withhold income taxes from employees' wages, while 42 firms supposedly paid no corporate income tax to the Korean authorities on the grounds that they are headquartered offshore. The remaining 25 were said to have been dishonest on their tax declarations.

The official also allegedly revealed that the NTS has conducted a transfer pricing review on the May tax payments of the 345 foreign companies operating in Korea whose annual sales are at least 50 billion won ($48.5 million).

However, the claims were subsequently denied by the NTS in another report in the Korea Times.

"The report about the NTS auditing 137 foreign companies is not true," the tax agency said in a statement.

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