9 Firms Face $100 Mil. Tax for Illegal Backdoor Listing
By Kim Jae-won
Staff Reporter
The nation’s tax agency has imposed punitive taxes of more than 100 billion won on nine companies, which evaded payments through illegal backdoor listings last year.
"The National Tax Service (NTS) investigated nine firms, which were suspected of tax evasion through this practice last year and levied gift and capital gains tax totaling 116.1 billion won on them,’’ Song Kwang-jo, assistant commissioner for investigations, said at a press conference Wednesday.
Song declined to reveal the names of the firms, saying, ``The nine firms are mostly in the telecommunication and entertainment industries.’’
Lee Seung-ho, director of the NTS investigation division, said that firms in the venture and entertainment industries seek to use backdoor listings because there are not many investors in the companies.
"It is easy for small firms or limited investors to use such a scheme because the investors can agree to it. If there are too many investors, it is difficult to use this method,’’ Lee said.
The tax agency said there were no foreign companies on the list.
Analysts said that small firms tend to use backdoor listings for gains and manage stakes of the limited investors.
"Usually, a big firm, for example, Samsung Life, lists itself on the bourse with an initial public offering (IPO). However, small firms use backdoor listing when they cannot meet the requirements for an IPO or want to list quickly,’’ Joo Sang-chul, chief investment strategist at Kyobo Securities, said.
"It is a somewhat illegal way and not a normal and good method of trading,’’ he added.