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| Hankook Tire Chairman Cho Yang-rai / Korea Times file |
Owners of Hankook Tire, Korea's top tire manufacturer, should pay 4.5 billion won ($3.4 million) in taxes from overseas capital gains income, Seoul Administrative Court ruled Thursday.
The administrative suit was their second failed attempt to lower or altogether annul the tax, following a Tax Tribunal ruling that had dismissed a previous case filed by the owner family of the seventh-largest tiremaker in the global market.
The administrative court ruled against Hankook Tire Chairman Cho Yang-rai and his son Hyun-sik, saying they deliberately hid income from a combined five bank accounts in Switzerland and Luxembourg from 1990 to 2014.
The capital gains income from the five accounts remained unreported for over two decades. No plausible explanation was found to justify the two holding accounts in the European countries other than for tax evasion purposes, the court added.
"The firm had little business presence in the European countries. Choosing overseas accounts over local ones is not explained by any other circumstances," the court said.
The ruling followed an administrative suit filed by the two to lower the amount of taxes imposed by National Tax Service (NTS) in 2019.
The tax agency said the chairman should pay 1.9 billion won and his son 2.6 billion won, respectively. The combined 4.5 billion won was the sum of unpaid income tax in addition to a fine of 40 percent for underreporting the amount in year-end tax settlement for years.
The tax agency dismissed the father and son's claim that they had no intention of hiding overseas income and therefore the fine of 40 percent should be lowered to 10 percent. The punitive 40 percent is applied to tax evasion attempts. The 10 percent fine is for late payments that are behind by a couple of months.
Hankook Tire recorded 1.79 trillion won in sales in the first three months of this year, up 10 percent year-on-year. Its operating profit was 126 billion won, a year-on-year decrease of 32.2 percent. Its operating profit in the April-June period is expected to fall to 150.6 billion won, a drop of 19.5 percent year-on-year.
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