[Exclusive] 912 Trillion Won Sent to Overseas Tax Havens Over 6 Years... Net Outflow Amounts to 200 Trillion Won

Yong Hye-in, Basic Income Party Lawmaker, "Increased Risk of Hidden Assets, Tax Authorities Must Actively Respond"
Evidence of Transfers to Tax Havens Highlighted by International Organizations

[Asia Economy Reporter Jeon Jin-young] It has been revealed that the amount remitted from South Korea to overseas tax havens over six years is approximately 912 trillion won, with a net outflow amounting to 200 trillion won.

According to data received by Asia Economy on the 6th from the office of Yong Hye-in, a member of the National Assembly's Planning and Finance Committee from the Basic Income Party, the amount remitted from South Korea to overseas tax havens from 2014 to 2019 totaled 912.7927 trillion won (772.8 billion USD). On the other hand, the amount remitted from overseas tax havens back to South Korea during the same period was 711.9972 trillion won (602.8 billion USD), resulting in a net outflow of approximately 200.7955 trillion won (170 billion USD). The office of Assemblyman Yong analyzed data submitted by the Bank of Korea targeting 50 overseas locations identified by the Organization for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF), and others as having significant tax avoidance purposes when establishing companies, arriving at these results.

[Image source=Yonhap News]

Among these regions, evidence of investment by major domestic conglomerates such as Samsung Electronics, Hyundai Motor Company, and SK was also detected. Based on a comprehensive survey of 64 currently restricted cross-shareholding corporate groups using the electronic disclosure system, it was found that 22 offshore corporations located in tax havens belonged to 51 major conglomerate groups, totaling 473 entities. These conglomerates also established offshore corporations in tax havens commonly pointed out by the OECD, IMF, and the European Union (EU), such as Panama, Bermuda, the British Virgin Islands, and the Cayman Islands.

Samsung Electronics owns companies in one location in the British Virgin Islands, two in the Cayman Islands, and three in Panama. In the Cayman Islands, Samsung Asset Management wholly owns Samsung Global SME PE Manager Fund and Samsung PE Manager. Hyundai Motor Company owns four entities in the Cayman Islands, three of which are 100% owned under the names China Millennium Corporation 1, 2, and 3. SK has 2 entities in Bermuda, 1 in the British Virgin Islands, and 26 in the Cayman Islands, while Lotte has one entity in the British Virgin Islands.

Including countries such as Singapore, which the International Consortium of Investigative Journalists (ICIJ) and others have pointed out as having signs of tax avoidance, the numbers increase significantly. The number of offshore corporations by tax haven is highest in Singapore with 146 companies, followed by Malaysia with 93, the Philippines with 50, the Cayman Islands with 41, Chile with 36, Panama with 28, Austria with 16, Belgium with 16, Switzerland with 12, Luxembourg with 10, and the U.S. Virgin Islands with 12. By conglomerate, Samsung leads with 59, SK with 57, LG with 34, CJ with 33, and Hyundai Motor Company with 25. There are 15 conglomerate groups with more than 10 offshore corporations located in tax havens.

Of course, not all remittances to tax havens can be considered tax evasion. It is also possible that legitimate investments were made in countries with favorable taxation and other conditions. Assemblyman Yong stated, "While remittances to tax havens cannot all be regarded as hidden overseas assets or offshore tax evasion, the risk of hidden assets increases as the net outflow grows," and emphasized, "It is time for tax authorities to actively respond to offshore tax evasion using paper companies based on their expertise."

In response, a Hyundai Motor Company representative said, "There are many strategic investments for future-oriented businesses," adding, "When investing in fund formats, the location of the investee is reflected accordingly, which may appear as such."

This content was produced with the assistance of AI translation services.