Exchange of account information to ferret out tax dodgers

By Choi Sung-jin

Starting in 2017, at least 53 countries, including Korea, Britain, Germany and France, will automatically exchange financial information about taxpayers. In 2018, Japan, Canada and other countries will join, pushing up the number of participating countries to 100, government officials said.

This means the National Tax Service will be able to regularly receive detailed information about the accounts opened and held by Koreans, individuals and businesses, throughout the world. The system will deal a heavy blow to those who open and manage accounts at foreign banks in order to hide their properties to avoid paying taxes.

According to the Ministry of Strategy and Finance officials, among the information providers are such tax shelters as Bermuda, the Cayman Islands and the Virgin Islands.

The exchange of information is in accordance with the Multilateral Competent Authority Agreement concluded in 2014.

The new system will affect all bank accounts held by individuals. In the case of business corporations, it will affect the existing accounts with deposits of $250,000 and more, and all newly-opened accounts. The tax authorities will exchange all information, including the names and addresses of account holders, account balances and interest and dividends paid to these accounts, needed for tax imposition.

To be hit hard by this measure here will be those, individuals and businesses, who are concealing their properties at foreign banks. Korean and U.S. tax authorities will also exchange tax information next year with the implementation of the U.S. Foreign Account Tax Compliance Act.

The government has decided to grant a final opportunity for voluntary tax reporting until March, and exempt surcharges and other punitive steps for taxpayers who step up voluntarily. “We will punish harshly violators after the period of voluntary reporting is over,” said a ministry official.