Samsung chief’s hidden accounts to face taxation

The National Tax Service has begun reviewing the Samsung chief’s assets allegedly withdrawn from accounts opened under borrowed names, after the Finance Ministry said the accounts are subject to taxation regardless of the timeline, officials said Wednesday.

The Finance Ministry said as the upper body of the tax office that it could apply the limitation of period for tax assessment for 10 years on the accounts allegedly used for fraud and other wrongdoings. With the ministry’s interpretation, it would be a matter of time for the tax agency to impose tax on money withdrawn from more than 1,000 accounts discovered during a special investigation by a special counsel into Chairman Lee Kun-hee in 2008, according to officials. 

The accounts allegedly had been used for the illegal transfer of wealth from Lee’s late father and the founder of the Samsung empire, Lee Byung-chull. The money withdrawn from the accounts totaled around 4.5 trillion won ($4.2 billion). But the money was taken out without paying due taxes. Rep. Park Yong-jin of the ruling Democratic Party of Korea raised related allegations during a parliamentary audit last month.

According to the Act on Real Name Financial Transactions and Confidentiality, a withholding tax of 90 percent is to be imposed on interest and dividend income made on borrowed name assets.

Rep. Park’s claim rekindled the dispute from 2008 when the FSS had sanctioned the Samsung chief for breach of real name verification in financial transactions.

Meanwhile, the tax agency’s latest move to expand its investigation into the Samsung chief’s accounts may signal drastic chaebol reform amid intensifying political pressure to curb the illegal transfer of wealth, local experts said.

The ruling party is considering taking legal action if the tax agency slaps what they deem a “lighter” amount of taxes, while urging the tax office to disclose the exact amount of Lee’s money subject to taxes.

By Cho Chung-un (christory@heraldcorp.com)