NTS Says Tax Dodgers Abuse Religious Organizations
By Kim Jae-won
Staff Reporter
Religious agencies, such as welfare centers run by churches and temples, are emerging as a shelter for overseas tax evasion, the National Tax Service said Thursday.
The new type of tax dodge was uncovered in the latest inspection of those suspected of avoiding taxes abroad by setting up a paper company in an offshore tax haven.
The NTS detected 14 tax evasion cases involving religious institutions from April to November and imposed 43.4 billion won in penalties. They accounted for 35.8 percent of the total 39 overseas tax evasion cases during the eight-month period.
One example was a businessman named Kim who set up a bogus firm in an overseas tax haven for investment in a foreign company abroad. After receiving dividends from the firm, he evaded taxes by donating the money to a local religious organization he owns.
Religious organizations are not subject to taxation as they are classified as non-profit organizations. The NTS charged him 1.2 billon won for evading income tax.
"Religious agencies helped their founders evade tax," Song Kwang-jo, assistant commissioner for investigation, said.
He added that tax havens are Hong Kong, the West Indies and South East Asian countries, with Koreans using Hong Kong the most.
The NTS received information on the evasions from the Joint International Tax Shelter Information Center (JITSIC). Korea has been an observer of the center since March.
"We will strengthen international cooperation to trace more cases," Song said.
Tax evaders also used names of family members to make new accounts. Some employers even borrowed names of employees to evade tax.
"By law, people should report to the government when they remit home $10,000 from overseas. Some people abused this rule by sending about $9,000 to various accounts which were issued under names of family members, acquaintances and even employees," Park Man-sung, director at the international investigation division, said.
The NTS levied a total of 153.4 billion won in fines against 39 tax evasion cases, down 15 percent from June last year to February this year.