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Foreign firms’ tariff evasion on rise: report
Customs data shows frequent price-rigging for low tariffs among multinational companies
By Kim Yon-sePublished : Oct. 27, 2013 - 19:24
An opposition lawmaker claimed Sunday that customs authorities have serious difficulty in collecting back taxes from multinational companies manipulating prices of goods for tariff benefits.
The Korea Customs Service levied multinational companies 285 billion won ($260 million) in back taxes in 2011 for seeking to evade or enjoy lower tariffs on goods, according to Rep. Lee In-young of the Democratic Party.
Citing the KCS data, the main opposition lawmaker said that the authorities have collected only 25 percent of the back taxes from 2011 as of October 2013.
Lee, in particular, stressed that the back taxes continued to increase over the past few years ― 52 billion won in 2008, 79 billion won in 2009 and 272 billion won in 2010 ― due to a growing number of fraudulent practices.
On a collective basis over the past five years, the KCS only collected 58 percent of the back taxes.
“As more insincere multinational firms are attempting to dodge taxes by fabricating figures for tariff calculation, the authorities and the KCS should reinforce supervision and disciplinary actions.” said Lee.
Foreign firms were found to have rigged goods prices in the course of their overseas transactions between their headquarters and Korean units.
Meanwhile, the KSC has been advised to beef up its tariff audits of luxury goods imports.
Lawmakers said that items subject to the change are mostly designer clothes, bags and cars imported by the Korean branches of multinational companies.
KCS data showed that the amount raised by detecting tax evasion and imposing penalties on the importers last year totaled 60 billion won.
Customs officials cited for an example a multinational apparel company which he said, in collusion with its head office, slashed the import price of its items and included the margin amount, some 37 billion won, in non-tariff categories.
The KCS imposed 8 billion won in back taxes in the case.
Recently, tax-evading companies have tended to disguise their import purchase prices as non-tariff items such as service costs or brokerage fees, said the officials.
The customs authorities are set to form a task force at the Seoul and Busan offices, respectively, in a bid to crack down on irregular import practices of multinational companies here.
By Kim Yon-se (kys@heraldcorp.com)
The Korea Customs Service levied multinational companies 285 billion won ($260 million) in back taxes in 2011 for seeking to evade or enjoy lower tariffs on goods, according to Rep. Lee In-young of the Democratic Party.
Citing the KCS data, the main opposition lawmaker said that the authorities have collected only 25 percent of the back taxes from 2011 as of October 2013.
Lee, in particular, stressed that the back taxes continued to increase over the past few years ― 52 billion won in 2008, 79 billion won in 2009 and 272 billion won in 2010 ― due to a growing number of fraudulent practices.
On a collective basis over the past five years, the KCS only collected 58 percent of the back taxes.
“As more insincere multinational firms are attempting to dodge taxes by fabricating figures for tariff calculation, the authorities and the KCS should reinforce supervision and disciplinary actions.” said Lee.
Foreign firms were found to have rigged goods prices in the course of their overseas transactions between their headquarters and Korean units.
Meanwhile, the KSC has been advised to beef up its tariff audits of luxury goods imports.
Lawmakers said that items subject to the change are mostly designer clothes, bags and cars imported by the Korean branches of multinational companies.
KCS data showed that the amount raised by detecting tax evasion and imposing penalties on the importers last year totaled 60 billion won.
Customs officials cited for an example a multinational apparel company which he said, in collusion with its head office, slashed the import price of its items and included the margin amount, some 37 billion won, in non-tariff categories.
The KCS imposed 8 billion won in back taxes in the case.
Recently, tax-evading companies have tended to disguise their import purchase prices as non-tariff items such as service costs or brokerage fees, said the officials.
The customs authorities are set to form a task force at the Seoul and Busan offices, respectively, in a bid to crack down on irregular import practices of multinational companies here.
By Kim Yon-se (kys@heraldcorp.com)
