A multinational IT company is suspected of having avoided taxes by routing payments through a contrived overseas setup that reduced or eliminated its obligations.The company’s local presence was registered as a service arm of the parent, while money earned was sent directly to foreign entities incorporated in jurisdictions that have tax treaties with Korea. The funds would eventually be remitted to the parent, which is in a non-treaty country.By doing this, the company avoided local corporate and value-added taxes while it also avoided the 15 percent withholding tax charged on most outbound payments.An adult child of a hotel owner with no apparent means of support lived a luxurious lifestyle, purchasing high-end watches and bags, while living abroad for extensive periods, charging his extravagant lifestyle on his father’s credit card.The National Tax Service (NTS) considers this as a way of avoiding the inheritance taxes. In another case, a father paid the tuition of a student studying abroad. The student purchased a house in the United States using the tuition that the parent had sent as well as funds borrowed from a Korean bank using a commercial building as collateral.The large sum of cash that was supposedly tuition payment was not properly… Read full this story
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