Korea’s super-rich hide $779 billion in tax havens

Korea’s super-rich had nearly $779 billion of wealth hidden in tax havens since the 1970s, ranking third among developing countries, says a new study.

Of the 139 developing countries studied, China came in first, with nearly $1.2 trillion, followed by Russia, with $798 billion transferred offshore by private banks taking advantage of loopholes in cross-border tax rules.

The report, titled “Price of Offshore Revisited,” was released Sunday by a British advocacy group Tax Justice Network. The writer Henry James, former chief economist at McKinsey & Co., a consulting firm, compiled data from the World Bank, the International Monetary Fund, the United Nations and central banks.

Globally, the wealthy elite hid $21 trillion from the taxman, equivalent to, or even larger than, the combined GDPs of the United States and Japan.

Henry says the estimated offshore fortune is conservative and it could add up to $32 trillion if non-financial assets such as real estate, yachts and artworks are included.

Switzerland, Hong Kong and Singapore are among the world’s most popular tax havens, states or countries with reduced or nil taxation levels.

The report says capital rapidly flowed out of Korea amid the political chaos after the death of President Park Chung-hee in 1979. Unlike other developing countries, however, only a small amount of debt flight took place in Korea because of strict rules on currency exchange and regulations on foreign banker activity.