Seoul to meet with Gaeseong complex firms to ease tax conflict with North

The Unification Ministry will hold its first consultation meeting with South Korean firms operating in the Gaeseong Industrial Complex in North Korea since Pyongyang in August adopted a new set of highly punitive tax rules governing their joint economic zone.

The ministry said the meeting with the 123 local firms operating in the complex will be held at 10:00 a.m. at the Korea Chamber of Commerce & Industry's building in central Seoul.

The meeting is designed to deliver the ministry's briefing on the Gaeseong complex tax rules recently adopted by the North and collect the firms' opinions and complaints over the regulations.

Possible ways to effectively deal with the recent tax row will also be discussed in the meeting, the ministry said.

South-North tensions have risen over the joint industrial zone in the North Korean border city of Kaesong since Pyongyang unilaterally adopted and implemented the revised tax rules.

The revision allows the North to levy abnormally heavy taxes on accounting irregularities by South Korean firms and wield other punitive measures.

Following the revisions, the North unilaterally levied a total of $160,000 in taxes on eight of the 123 South Korean firms in the industrial zone designed to strengthen inter-Korean economic cooperation by allowing deep-pocketed South Korean companies to hire cheap North Korean labor.

Twenty-one other firms have also been pressed to submit accounting documents, mostly containing sensitive information, with the failure to do so leading to hefty taxes.

South Korean firms have vehemently protested the new taxation, pressuring Seoul to block the tough tax regulations they said could become a major stumbling block to running the joint industrial park, the only major inter-Korean project remaining under the conservative Lee Myung-bak administration. (Yonhap)