By Lee Min-hyung
Nearly one out of three foreign investors in Korea possess a nationality from tax havens, Rep. Park Gwang-on of the main opposition Minjoo Party of Korea said Sunday, calling for the government to toughen sanctions on their possible unfair trades.
According to data from the Korea Customers Service (KCS), some 12,786 out of 42,692 foreign investors here hold nationalities from the so-called tax havens ― such as the Cayman Islands, Luxembourg and Ireland, said the second-term lawmaker.
Their combined stock and bond value is worth some 16.37 trillion won ($148.27 billion), amounting to almost one third of the total investment from foreign investors in Korea, he added.
“Tax havens are where individuals or companies establish a paper company in their bid to dodge taxes,” he said. “The government should step up its monitoring on the market by strengthening cross-border alliances with overseas financial watchdogs, due to concerns over potential unfair business practices, such as tax dodges or stock price manipulation.”
By countries, Luxembourg topped the list with 480 investors in the amount of stocks owned worth some 2.93 trillion won, followed by 2.85 trillion won obtained by 143 Singaporean investors.
The data also revealed that four foreign investors, from Switzerland, Luxembourg and Singapore, held more than 1 trillion won in bonds, respectively.
In 2011, the KCS classified 62 countries as tax havens where individuals and businesses are under minimal tax liability. Politicians and entrepreneurs here have often used the countries as a means to dodge taxes or create slush funds.
Last year, the nation’s tax watchdog levied some 1.28 trillion won in taxes, from some 500 billion won in 2010. Park called on the government to come up with specific monitoring measures, as it is hard for the government to crack down on transactional information of paper companies.
Amid the growing controversy over the tax haven, the KCS has in recent years joined hands with government bodies ― including the Ministry of Strategy and Finance ― to obtain stronger legal authority to monitor tax dodgers in Korea.