The National Tax Service said Wednesday that it is investigating 38 people suspected of stashing personal wealth abroad for tax evasion.
The large-scale probe came after the taxation agency for the first time in June had asked some 2,000 individuals to voluntarily report their overseas assets worth more than 1 billion won ($937,000).
Of the 38 people subject to the probe, 24 were suspected to have operated shell corporations abroad, while 14 others held incomes or assets whose origin could not be verified.
An owner of a manufacturing company set up a shell corporation in the Virgin Islands, a tax haven and transferred the stake of his profitable overseas factory to the fake company.
Another businessman was found to have pretended to be a permanent overseas resident to conceal his income in Korea. He reentered the country just five days after submitting related documents.
According to NTS, a total of 525 overseas bank accounts, including 211 of individuals and 314 of corporations, have been reported in June, with the amount worth about 11.5 trillion won.
The average assets were 4.6 billion won for individuals and 34.5 billion won for corporations.
Most of the overseas assets, or 95.7 percent, were held as bank deposits, while 2.4 percent were stocks
Even though some illegal cases were found, questions raised over the effectiveness of the nation’s first investigation on offshore tax evasion.
According to NTS, only 10.1 percent of the people requested to do so reported their overseas assets and most of them were found to have transferred their wealth following the implementation of the law.
“The investigation seemed to have little impact in encouraging tax dodgers to voluntarily report their assets,” said Park Yun-jun, assistant commissioner for international taxation.
“We continue to conduct the investigation on regular basis. Along with collecting all taxes back, we will impose the maximum penalty permissible by law on illegal cases,” he said.
Park said the agency also agrees to strong incentives for cooperative taxpayers but more discussions should be made among related government offices.
Under the current law, people who fail to prove the origin of undeclared deposits face fines of up to 5 percent of the amount and other penalties.
The fine is expected to increase to 10 percent of the undeclared money from next year and 45 percent from 2016.
