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South Koreans Declare Their Offshore Accounts

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

31 August 2012


As the South Korean National Tax Service (NTS) continues to strengthen its information gathering resources, declarations by both individuals and companies of foreign financial accounts have increased sharply.

For the past year, the NTS has been on a drive to augment revenues and broaden the country’s tax base by way of increased tax compliance. It has looked, for example, to utilize its current and planned tax information exchange arrangements with other countries to investigate taxpayers with suspected undeclared foreign bank accounts.

The NTS has disclosed that taxes collected from companies and individuals with undeclared assets held abroad were nearly KRW490bn (USD432m) in the first half of this year, after almost KRW964bn in total in 2011.

It also said that, so far this year, a total of KRW18.6 trillion of deposits, shares or other forms of assets held in overseas financial accounts has been reported voluntarily. That represented an increase of almost 62%, and included KRW16.5 trillion reported by companies (+57%), and KRW2.1 trillion by individuals (+115%).

In particular, the NTS disclosed that the reported amount held by individuals in Swiss accounts increased significantly – to KRW100.3bn, from KRW7.3bn a year earlier. This is an apparent consequence of the revised double taxation agreement between South Korea and Switzerland, which contains provisions on the exchange of tax information, which went into effect on July 25 this year.

The NTS has declared that it intends to develop further its ability to identify and investigate undeclared accounts held abroad. However, it is also running a disclosure programme whereby those who declare their overseas assets voluntarily will retain their confidentiality and, while they will be required to pay the tax and interest due, will not be audited.

TAGS: individuals | compliance | tax | business | tax information exchange agreement (TIEA) | tax compliance | interest | banking | offshore | agreements | offshore banking | Korea, South | Switzerland

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