N. Korea urges S. Korean firms in Kaesong park to pay taxes

North Korea has demanded that South Korean firms operating in a jointly run factory park in the communist nation pay taxes to North Korea, an official said Monday, in an apparent breach of a September deal.

The North said in a notice last week that the firms in the factory park in the North's western border city of Kaesong should pay taxes incurred between Jan. 1 and April 8, according to the official handling the issue at the unification ministry.

The ministry, which handles inter-Korean affairs, said the North's demand did not make any sense, and it was in talks with North Korea over the issue.

The move comes three months after North Korea agreed not to collect taxes from the South Korean firms for 2013 to make up for their losses following its unilateral closure of the factory park on April 9.

In September, the sides resumed the operation of the factory park, a month after the North pledged not to shut it down again "under any circumstances."

The sprawling capitalist enclave, the last-remaining symbol of inter-Korean economic cooperation, is home to 120 small South Korean plants that produce garments and other labor-intensive goods. More than 44,000 North Koreans work in the complex.

The factory park serves as a major legitimate revenue source for the cash-strapped communist country. The North earned US$80 million in wages for its workers last year. (Yonhap News)