NTS performed tax audits on suspected cases of tax evasion by MNEs, etc.

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 length prices.