Korea to sign Tax Information Exchange Agreements with British Virgin Island and Costa Rica

Korea has agreed to conclude the Tax Information Exchange Agreements (“TIEA”) with the British Virgin Islands and Costa Rica during the first half year of 2011. Including these countries, Korea has concluded TIEA with a total of 14 tax havens since 2009. Twelve other countries include Bahamas, Bermuda, Guernsey, Marshall Islands, Cayman Island, Liberia, Jersey, Anguilla, Samos, St Lucia, Vanuatu and Cook Islands. 

TIEA shall cover information required for the administration and enforcement of domestic tax laws, including details on taxpayer registration, corporate ownership and personal or corporate transaction information held by banks and other financial institutions. It also covers information on corporate ownership including shareholders, settlers, trustees, beneficiaries, and general or limited partners of partnership. With respect to tax investigations abroad, TIEA allows representatives of the applicant party to interview individuals, to investigate books of accounts or to participate in tax audits being performed by the other party. TIEA requires the confidentiality of the information obtained from the other party unless it is required for the purpose of the enforcement of tax administration or tax appeals of the governing authorities. 

According to the Ministry of Strategy and Finance (MOSF), TIEA has established a framework for Korea to curb abusive transactions by the upper income earners, conglomerates or foreign investors in Korea. The MOSF plans to pursue TIEA with countries including Gibraltar, Mauritius and San Marino.