National Tax Service Concludes "Proper Payment" in Kakao Kim Beom-su's 800 Billion Won Tax Evasion Allegation

Kim Beom-su, Chairman of Kakao, is giving a greeting at the Youth Hope ON meeting held on the morning of the 9th at Kakao Pangyo Office in Seongnam-si, Gyeonggi Province. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Kim Hyung-min] The National Tax Service (NTS) has concluded that taxes were "properly paid" regarding allegations that Kakao founder Kim Beom-su and K Cube Holdings evaded taxes worth around 800 billion KRW during the merger of Kakao and Daum.

According to the IT industry and Yonhap News on the 10th, the Seoul Regional Tax Office recently notified that "the relevant matters have been properly reflected in tax filings and payments" in relation to the report filed last September by the civic group Speculation Capital Watchdog Center accusing founder Kim and K Cube Holdings of tax evasion amounting to 886.3 billion KRW.

However, the NTS did not provide specific explanations, citing Article 81-18 (Confidentiality) of the Framework Act on National Taxes, which prohibits disclosure of individual taxpayer information.

Earlier, on September 16 last year, the Speculation Capital Watchdog Center claimed that "K Cube Holdings evaded 363.9 billion KRW and Chairman Kim evaded 522.4 billion KRW in capital gains tax by manipulating accounting to make it appear as if the capital gains from the 2014 Kakao and Daum merger were valuation gains from the rise in stock prices of originally held shares," and filed a complaint with the Seoul Regional Tax Office's civil affairs office.

The Seoul Tax Office assigned investigators and changed the person in charge in mid-January, ultimately making a final decision at the end of last month.

The Center stated that if the NTS protects Kakao by not providing detailed results of the tax evasion investigation, it could face joint accusations. Additionally, citing delays in the NTS investigation, on December 27 last year, the Center separately filed a complaint with the National Police Agency against founder Kim and his brother-in-law for violations of the Tax Offenses Punishment Act, the Act on the Aggravated Punishment of Specific Crimes, and the Capital Markets Act. The Gyeonggi Southern Provincial Police Agency began an investigation on January 18.

In response, Kakao stated, "The merger was conducted through agreements among various shareholders of Daum and Kakao, making artificial intervention by any specific party difficult," and added, "For the same reason, the case reported in October 2018 was dismissed without indictment by the Seoul Central District Prosecutors' Office on March 22, 2019."

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