Cash payment of 100 billion won made; five overseas vessels offered as collateral for remainder

High-delinquency TF results announced; NTS chief vows to pursue tax debts at home and abroad

National Tax Service Commissioner Lim Gwang-hyeon briefs reporters at Government Complex Sejong on Wednesday on the results of the high-delinquency special response task force. [Yonhap]
National Tax Service Commissioner Lim Gwang-hyeon briefs reporters at Government Complex Sejong on Wednesday on the results of the high-delinquency special response task force. [Yonhap]

Kwon Hyuk, chairman of Sinokor Group and the country's top individual tax delinquent, has agreed to settle a tax debt of around 400 billion won ($298 million) in full.

The National Tax Service said Wednesday that its high-delinquency special response task force had tracked down Kwon and secured a repayment plan covering his personal tax arrears of 393.8 billion won.

The debt stems from a comprehensive income tax assessment in 2011 that went unpaid for roughly 15 years. Kwon made an initial cash payment of 100 billion won in July, breaking the previous single-payment record of 50 billion won.

He has submitted a repayment plan for the remainder. Because Kwon holds no domestic assets in his name, he offered five overseas vessels as collateral. The NTS said the combined value of the ships exceeds the outstanding balance.

An assessment of the collateral's adequacy is currently underway. The NTS added that it is also seeking advance consultation from the Board of Audit and Inspection, as this marks the first time overseas vessels have been accepted as collateral.

When Kwon's personal arrears are combined with secondary tax liabilities imposed on affiliated companies, the total debt on the books reaches 790.2 billion won.

Once Kwon pays the full 393.8 billion won, the secondary liabilities assigned to those companies will also be extinguished, clearing the entire recorded debt.

NTS Commissioner Lim Gwang-hyeon said at the briefing that the payment was "the largest tax delinquency settlement in the history of the NTS," adding that if the repayment plan proceeds as scheduled — or if the collateral is seized — roughly 800 billion won in arrears will be wiped out.

Kwon had long argued that he owed no taxes in South Korea because he was not a Korean resident, but he has now indicated his intention to pay in full.

Ryu Chung-sun, director of international taxation, said Kwon had expressed a desire to contribute to the Korean economy through his shipping business, "becoming a Jang Bogo of the Republic of Korea," and appeared to have concluded that operating under the current risk environment posed considerable difficulty.

The high-delinquency special response task force, launched in January, focused its efforts on tracing and recovering assets that delinquent taxpayers had concealed overseas.

The task force expanded its global information-sharing network, dispatching delegations to key countries involved in understanding overseas ownership structures and holding emergency information meetings to convey the importance of the cases to foreign tax authorities.

It also held commissioner-level meetings with counterparts in key countries and concluded memoranda of understanding on collection cooperation and information exchange.

The NTS said these efforts opened the door to gathering actionable intelligence through in-person visits to foreign authorities and remote video conferences.

Commissioner Lim said inviting the tax chiefs of Liberia and Panama — flag-of-convenience states favored for their shipping advantages — had produced substantial dialogue and progress, and that ongoing exchanges with the UK tax authority were also proceeding smoothly.

To institutionalize the gains, the NTS is finalizing plans to establish a permanent special investigation team linking tax audits and delinquency tracking within the irregular audit divisions of regional tax offices nationwide, including the Seoul Metropolitan Tax Office's Fourth Bureau.

The special investigation team will conduct irregular audits targeting delinquent taxpayers suspected of tax evasion through capital flight, in addition to investigating those who have attempted to evade seizure.

To staff the teams with top talent, the NTS plans to recruit personnel with expertise in irregular criminal tax investigations, owner-shareholder asset probes, legal review of seized assets, and offshore intelligence gathering during November and December.

Commissioner Lim said the NTS would build on the task force's experience to turn short-term collection results into lasting, long-term outcomes, vowing to "track and collect without exception, at home and abroad, so that delinquent taxpayers have nowhere in the world to hide their assets." He added that the agency would work to realize tax justice and build a fair tax administration environment that earns the public's trust.


oskymoon@heraldcorp.com