NTS performed tax audits on suspected cases of
tax evasion by MNEs, etc.
On February 2, 2022, the National Tax Service (NTS) announced that it has
performed tax audits on 44 suspected offshore tax evasion cases. The type of
suspected tax evasions are as follows.
Tax avoidance using
international transactions with its overseas subsidiaries that are difficult
for ordinary people to access (i.e., tunneling).
Disguise of a Korean permanent
establishment (PE) as a liaison office which has no tax obligation in Korea or
concealment of a PE to avoid taxation on MNEs in fast growing industries such
as semiconductors, logistics, equipment, etc.
Tax avoidance by reducing
Korean taxable income through inappropriate financial transactions between
related parties such as liquidation of an overseas subsidiary prior to
recovering the investment amount (i.e., loans) to the subsidiary or share
transaction between related parties at higher or lower prices than their arm’s