The National Tax Service’s headquarters in downtown Seoul
By Kim Jae-won
Herve Falciani, a former IT employee of HSBC’s Swiss subsidiary, surprised the world’s tax authorities in 2010 by stealing banking information on 24,000 customers of the bank.
Falciani went to France and sold it to tax authorities, who were seeking to trace their nationals’ bank accounts in Switzerland that were allegedly being used for tax evasion.
Korea had no way to buy such information due to the lack of a budget at the time, but it set aside 2 billion won ($1.8 million) this year to collect details from brokers and bank employees abroad.
The tax agency said Friday that it will use the funds to buy financial information on alleged tax dodgers.
The National Assembly approved late last year a request from the National Tax Service (NTS) to set aside special funds for its agents who collect taxpayers’ overseas banking information. The government is under pressure to increase tax revenue so as not to follow in the footsteps of some European countries which are struggling to survive a debt crisis.
“It is common for foreign tax agencies, such as in France and Germany, to acquire information through such channels. The Assembly acknowledged the need at last,” said a high-ranking NTS official on condition of anonymity.
The tax official said that the agency has no obligation to submit receipts for the funds as long as it reports to parliament about the spending.
He said prices for the account information will vary by its value, and added usually bank employees are the main sources.
Experts say the funds will help the tax agency find out more hidden tax revenue along with a revised tax treaty with Switzerland.
Seoul and Berne agreed to revise a tax treaty in 2010 to exchange banking information on their nationals at a limited level. The Assembly ratified it last month, while its Swiss counterpart is expected to endorse it in June.
The NTS has put its focus on overseas tax evasion to increase revenue as well as to ensure “justice in taxation.”
It is a global trend that tax authorities are cracking down on overseas tax evasion. The United States is also aggressively conducting tax audits on U.S.-based companies, which operate businesses overseas in cooperation with other tax agencies. The country is also interested in tax information on Korean immigrants to the country, who it suspects, hide assets in Korea to dodge taxes there.