38 Tax Evasion Suspects Under Audit for Embezzling Company Funds on Golf and Hotel Memberships...

13 Cases of Private Use of Corporate Funds, 25 Cases of Cash and Privileged Tax Evasion Detected
National Tax Service: "Strict Response with Zero Tolerance for Unfair Tax Evasion"

[Asia Economy Reporter Kwangho Lee]#Case 1= Company A acquired two high-end sports cars worth a total of 500 million KRW and luxury hotel memberships worth 200 million KRW, then provided them exclusively for use by the owner’s family. In addition, it paid lawsuit settlement fees on behalf of the owner OOO’s illegal acts or falsely registered the full-time housewife spouse as an auditor and paid a false salary of 700 million KRW. Furthermore, it signed a false subcontract construction service contract with a nominal corporation on paper and embezzled company funds. Accordingly, the National Tax Service imposed additional taxes of 000 billion KRW in value-added tax and corporate tax, and approximately 0 billion KRW in income tax on the owner and spouse as income earners.

#Case 2= Company B acquired a luxury golf village worth about 2 billion KRW unrelated to its business and provided it exclusively for use by the owner’s family. It also continuously remitted funds under the name of loans to overseas local corporation C, which was in a capital deficit state with unclear business continuity, thereby embezzling corporate funds. Then, it is suspected that overseas local corporation C recorded false costs and misappropriated the embezzled funds for the owner’s children’s study abroad and living expenses. The National Tax Service plans to strictly investigate allegations of private use of the luxury golf village and embezzlement of corporate funds.

#Case 3= C Plastic Surgery Clinic is a private hospital recently experiencing rapid sales growth through word of mouth. It offered dual pricing such as cash discounts through the consultation manager, received surgery fees in cash, and frequently deposited them into non-business accounts via ATMs, thereby omitting income reporting. With the income concealed in this way, the owner acquired high-end real estate for themselves and their family. In addition, private expenses were improperly recorded as entertainment expenses to evade income reporting, and private costs such as golf courses, entertainment establishments, and hotel accommodations were included as necessary hospital expenses to evade income reporting. Accordingly, the National Tax Service imposed additional taxes of ○ billion KRW including comprehensive income tax and imposed cash receipt fines of ○ billion KRW.

No Jeong-seok, Director of the National Tax Service Investigation Bureau, is giving a briefing on the commencement of tax investigations into 38 individuals suspected of unfair tax evasion, including private misuse of corporate funds, cash tax evasion during economic booms, and privileged tax evasion, at the Government National Tax Service building on the 4th.

The National Tax Service has detected numerous cases where corporate funds were misappropriated for the owner’s family’s study abroad expenses and luxury goods purchases, or taxes were evaded through covert transactions such as cash and gold bars, despite the difficult economic conditions caused by the novel coronavirus disease (COVID-19), and has launched tax investigations on 38 suspects of unfair tax evasion.

The average assets of the investigation targets were found to be 11.2 billion KRW (individual) to 188.6 billion KRW (corporate).

The selected tax evasion suspects can be categorized into three types: ▲private use of corporate funds (13 cases) ▲cash tax evasion during boom periods (22 cases) ▲privilege and unfair tax evasion (3 cases).

First, these suspects employed various illicit methods ranging from misappropriating corporate funds for study abroad expenses and luxury goods purchases to supporting affiliated companies and embezzlement through disguised affiliates.

They also used corporate cards for luxury hotels, entertainment bars, and overseas expenses, paid high salaries to owner’s family members with unclear work status, and evaded taxes through gold bars.

Due to difficulties in overseas travel caused by COVID-19, there was a surge in domestic leisure and hobby demand, leading to significant income increases for business operators, and tax evasion by celebrities who earned high incomes and acquired high-value real estate, as well as covert cash transactions by business operators with privileged status such as public officials, licensed professionals, and medical specialists, were also identified.

No Jeong-seok, Director of the National Tax Service Investigation Bureau, said, "Despite the difficult times when they should have shown social responsibility (noblesse oblige), they neglected their constitutional duty to pay taxes, one of the four major obligations, misappropriated corporate funds for personal purposes, and showed typical patterns of ‘evasion and unfairness’ by using covert transactions such as cash and gold bars and undisclosed information unavailable to the general public." He added, "We will thoroughly verify not only the tax evasion suspects but also their families and related companies under the principle of zero tolerance for unfair tax evasion."

He continued, "If intentional tax evasion is confirmed during the investigation process through manipulation of evidence or use of nominee accounts, we will strictly handle the case, including filing charges under the Tax Crime Punishment Act."

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