By Kim Jae-won
Can former operators of the defunct European Chamber of Commerce in Korea (EUCCK) pay up 4.5 billion won in back taxes?
The issue is important because European businesses are forming a new lobby group. If it is launched without the taxes being paid, it would raise suspicions that the EUCCK was disbanded for tax-dodging purposes.
Tax authorities are determined to have the lobby group pay up.
They said it had paid 2.1 billion won — 1.9 billion won in fines and 200 million won in back taxes — but still owes the National Tax Service (NTS) 2.4 billion won, more than half of the bill. The group promised to pay the rest as soon as the organization’s liquidation process is completed.
However, industry watchers say that it is unclear whether it will get enough cash to pay the remainder.
The timing of the payment matters.
Former members of the EUCCK have filed a lawsuit seeking 2 billion won from two staff members of the organization but it is not clear whether they will win the lawsuit and, even if they do, it is another matter to recoup the outstanding money taken by the two.
A court ruling is expected to come in six months to a year’s time, but it could take even longer if appeals to a higher court are filed. There is a high possibility that the legal dispute may take a few years, considering the large amount of money involved, meaning the EUCCK must pay additional interest to the NTS.
Critics say the NTS is being too generous with the defunct chamber compared to Korean business groups. The tax agency said it believed the European lobby would pay the remaining bill to keep doing business here.
“We don’t need to worry about the bill. It has no choice but to pay it if it wants to do business here,” said a director of the NTS on condition of anonymity.
The tax agency has applied strict standards to Korean companies that evaded taxes and delayed the payment, and is expected to apply the same standards to the EUCCK.
Meanwhile, a group of about 50 European companies applied to create a new business lobby group to the Ministry of Knowledge Economy earlier this week. They said they wanted a fresh start under the umbrella of the ministry, which it seeks to have firmer legal support from.
Before the shutdown, the EUCCK had 830 members, mostly European companies doing business here. It was established in 1986 as a gathering of European businesspeople before it became a nonprofit organization in 1999.
It was under tax audit earlier this year by the Namdaemun Tax Office, a district tax office in downtown Seoul, which had received allegations of tax evasion from industry sources. This was the first time that a foreign chamber of commerce was investigated by Korea’s tax authorities.
The Namdaemun office said that the EUCCK did not pay appropriate corporate taxes, though it made money by selling advertisements for its monthly magazine.
The tax probe raised concerns among foreign businesspeople here as they worried whether the investigation would spread to other foreign chambers, such as the American Chamber of Commerce in Korea and the British Chamber of Commerce in Korea among others.