Reprinted from Caribbean Net News
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SEOUL, South Korea (AFP): Finance and Economy Minister Han Duck-Soo on Friday defended a tax audit of foreign funds as part of a drive to enhance transparency in South Korea. Yonhap news agency said the tax authorities have already found some alleged irregularities by US-based investment fund, Carlyle Group, which held a stake of some 36 percent in KorAm Bank and sold the lender to Citigroup for 2.6 billion dollars in 2004. It also did not pay taxes by registering its affiliate in the Cayman Islands.
"I understand the probe is simply part of tax administration work for faireness and transparency. If needed, we must conduct a consistent probe to find out illegal activites," Han said.
His comment followed reports that auditors from the National Tax Service (NTS) probing suspicions of tex evasion raided the offices of several foreign funds this week.
The tax probe comes amid growing complaints from foreign investors that South Korea is increasingly hostile towards them and offshore entities who use tax havens and tax treaties to avoid taxation.
NTS head Lee Ju-Sung has said his office was closely watching whether foreign funds were "abusing" tax avoidance systems.
Han gave no details on the probe but said tax authorities should cautiously judge whether foreign funds violated local tax codes or other rules.
"If foreign funds violate local and international regulations, they should be investigated," he said.
"We now focus on deals done or completed but if other deals are completed, it is necessary to investigate them as well," an unnamed NTS official told Yonhap.
Hostility is growing here to foreign funds which have made huge amounts of money by acquiring real estate and other prime assets in the aftermath of the 1997-98 Asian fincancial crisis.
Defenders say the funds took on high-risk investments at a time when South Korean investors were unwilling to do so and saved or created thousands of jobs and boosted the country's economy
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