Korean tax authorities to oversee U.S. accounts

Starting next year, the National Tax Service will gain direct access to information on accounts owned by Korean nationals in the United States based on an incoming bilateral taxation convention.

With this expanded scope of information, the tax office hopes to add momentum to its overseas network and tighten its grip over potential offshore tax evasion.

The Ministry of Strategy and Finance said Thursday that the Korean and U.S. governments are currently holding negotiations for a bilateral taxation agreement on such exchange of taxpayers’ account information.

The discussions are expected to conclude by the end of June and the agreement will take effect in September, officials said.

The pact will be affiliated with the U.S. Foreign Account Tax Compliance Act, an incoming law enabling the U.S. tax office to receive overseas account information of U.S. citizens or companies.

Under the agreement, all U.S. nationals or permanent residents who own $50,000 or more, and U.S. firms whose assets amount to $250,000 or more, will be subject to the account information exchange, starting in July.

As a quid pro quo, the U.S. government will provide the information of Korean-owned accounts incurring an annual interest of $10 or more.

Though the agreement is to take effect in July, it will be in September next year that the two countries actually come up with a tangible list of accounts, which will then be exchanged on an annual basis, officials added.

So far, tax offices of both countries had to make individual requests whenever a suspected case of overseas cash stashing was detected.

Such regular exchange of overseas account information is expected to contribute to the prevention of offshore tax evasion.

Last year, the tax office dished out fines amounting to 1.8 trillion won ($1.7 billion) involving overseas tax evasion.

By Bae Hyun-jung (tellme@heraldcorp.com)