Penalties on offshore tax evasion tops W1 tril.

By Choi Kyong-ae

The National Tax Service (NTS) said Monday that it imposed 1.08 trillion won ($945 million) in fines on offshore tax evaders last year, up 31 percent from a year earlier.

Penalty taxes for offshore tax avoidance exceeded 1 trillion won in 2013 for the first time since the national tax agency began its crackdown on offshore tax dodging in 2008, the NTS said in a statement.

“We have stepped up our efforts to combat offshore tax evasion by collecting information on offshore tax avoidance and sharing information on paper companies in tax havens with advanced countries such as the U.S. and Australia,” Won Jung-hee, assistant commissioner for investigation at NTS, said in a press briefing.

“Stronger cooperation on information sharing with the Korea Customs Service, the Financial Supervisory Service and the Bank of Korea also helped.”

Penalty taxes slapped on overseas tax dodgers continued to climb to 1.08 trillion won last year, sharply up from 150.3 billion won in 2008, the statement said, adding that the NTS set up a task force team in 2009 to crack down on undeclared offshore accounts.

In line with broader tax-collecting efforts led by the Park Geun-hye government, the tax agency has stepped up the drive to collect as much tax income as possible to help the government pursue its costly welfare and other policies for her five-year term that ends in February 2018.

The NTS said it collected a total of 190.2 trillion won in tax revenue last year, failing to meet the target of 199 trillion won. But it has set a higher revenue target of 204.9 trillion won for this year.

To achieve the target, the NTS said it will continue to add power to the government’s initiative to bring the “underground economy” into the open for taxation throughout the year.

In the past year, some multinational financial firms came under an investigation by the tax or financial regulators for unfair practices.

Most recently, UBS AG’s Seoul branch is being investigated over allegations of tax evasion through its involvement in derivatives transactions against local laws, a person familiar with the matter told The Korea Times early this month.

Previously, the Seoul branches of Credit Suisse, Merrill Lynch Securities and Goldman Sachs were ordered by the NTS to pay a combined 75 billion won in fines for illegal transactions.