The National Tax Service (NTS) announced on Dec. 28 that it has collected 1.35 trillion won (US$1.05 billion) in tax assessments in the area of overseas tax evasion alone through tax investigations conducted this year. The figure exceeds the average annual collection for the three years before the COVID-19 pandemic, from 2017 to 2019, which stood at 1.349 trillion won.
The number of investigations into overseas tax evasion, which stood at 226 cases in 2018 and 233 cases in 2019, contracted to 192 cases in 2020 after the onset of the COVID-19 pandemic. The number of investigations has gradually been growing as the pandemic eases. However, it still remains relatively low compared to the pre-pandemic period. This year again, the number of investigations into overseas tax evasion has remained at around 200 cases. However, the NTS explains that it is precisely selecting investigation targets, increasing the depth of investigations, and thus achieving an overall increase in tax investigation performance by utilizing big data analysis and sharing tax information between countries.
The main types of overseas tax evasion detected in this year’s tax investigations include corporate income and fund outflow abroad, omission and fraudulent gifts of foreign income, and intelligent domestic tax avoidance by multinational corporations.
Numerous cases have been discovered by the NTS where businesses have exported domestic income overseas through methods such as providing goods and services to overseas production facilities at prices lower than market value. Some cases have involved concealing income earned abroad in foreign financial accounts, attempting to smuggle it back into the country through undisclosed accounts, and being caught in the process.
Instances have been discovered where profits were misappropriated for personal purposes through the method of omitting overseas sales while channeling revenue through overseas paper companies dominated by owners. Multinational corporations that achieved significant profits domestically have also become subject to tax reassessment due to unfair practices such as falsely downsizing the functions of domestic subsidiaries to unjustly transfer domestic profits overseas and evade corporate taxes.