South Korea's financial ministry said Monday it plans to tighten rules on overseas financial accounts held by its nationals in a bid to crack down on tax evasions and root out illegal deeds.
South Koreans with overseas financial accounts worth more than 1 billion won ($898,876) will be obligated to report their overseas assets and their sources starting next year, according to the Ministry of Strategy and Finance.
The plan is in line with the government's move to establish a fair tax justice system and raise tax revenue for its costly welfare programs by regularizing the underground economy that provides a platform for illegal business activities such as tax evasion and smuggling.
Following the new rule, South Koreans with such financial accounts will be imposed with a 10 percent fine on their assets when they fail to report them to the national tax agency.
Tax evaders will be also levied with additional penalties, which could make them pay up to 18 percent of the unreported assets as fines.
The current rule only imposes a 4 percent fine for unreported overseas accounts with assets worth less than 2 billion won.
In 2011, the combined amount of foreign currency trade between South Korea and tax havens came to $323 billion, hovering far above $161 billion tallied in the trading of tangible goods.
Last year, South Korea exposed 202 cases of tax evasion and collected 825.8 billion won.
The government added that it will also expand cooperation with other countries such as Switzerland to exchange financial information to make it easier to track down bank accounts suspected of being used to hide money.
According to separate government data, South Koreans have directly invested over 16 trillion won in overseas tax havens over the past five years, including the Cayman Islands, Bermuda, the Philippines and Singapore. (Yonhap News)
