[THE INVESTOR]The National Tax Service is investigating a number of private equity funds’ clients on suspicion of tax evasion, a local daily reported on Aug. 30.

According to the South Korean daily Seoul Economic Daily, the NTS has evidence that a number of individuals who invested in PEFs investing in overseas assets have evaded inheritance, gift and capital gains taxes.

Citing an unnamed finance industry source, the daily reported that wealthy investors have long used PEFs to evade inheritance and gift taxes. 



Although the country introduced regulations to monitor and tax South Koreans’ overseas income, PEFs are not subjected to the regulations.

However, the authorities say that legally formed PEFs are subjected to local regulations, and that tax evasion only occurs in rare cases where a PEF is established illegally.

Choi He-suk (cheesuk@heraldcorp.com)