AMCHAM to face tax audit

After slapping the European Union Chamber of Commerce in Korea (EUCCK) with a huge fine over unpaid taxes, the National Tax Service (NTS) is highly likely to conduct a tax audit against commerce representatives of other countries, sources said Monday.

While tax authorities are vague about their next actions, they are talking about other foreign chambers of commerce, including the American Chamber of Commerce or AMCHAM Korea. They believe some of these have been underpaying corporate and value-added taxes on their profits in past years.

“All organizations are subject to corporate tax if they make a profit from running a business. They also should pay value-added taxes for services and goods which they provide. There is no reason foreign chambers of commerce should be exempted from these duties,” said a senior NTS official.

“The EUCCK never reported its income after it was classified as a corporation in 2005.”

The NTS Namdaemun District Office in Seoul recently imposed 4.5 billion won in fines and back taxes on the EUUCK, which became the first foreign chamber of commerce to be hit with such a penalty here.

It insisted that the EUUCK gained profits from advertisements it sells in its monthly magazine, “Infomag,” and commissions from business events hosted for European firms. However, these types of income weren’t reported to tax officials, according to the NTS.

According to industry sources, it’s likely that other foreign chambers of commerce, most notably AMCHAM, will be getting a bill from the NTS soon as they have been earning the same type of income as the EUUCK.

AMCHAM Korea publishes a quarterly magazine titled “Journal” and charges 100,000 won to readers as an annual subscription fee. The British Chamber of Commerce in Korea (BCCK) also sells advertisements on its website, newsletter and membership directory. It charges 300,000 won to 3.5 million won for the advertisements, according to its website.

AMCHAM Korea and BCCK representatives weren’t immediately available for comment. The EUCCK, established in 1986, is the second-biggest foreign chamber of commerce behind AMCHAM Korea, with over 800 listed members from Europe and Korea.

The EUUCK agreed to pay 1.6 billion won fine, but refused to hand over the 2.9 billion won in back tax, according to NTS officials. The NTS conducted a tax audit on EUUCK earlier this year.

The NTS official was coy about whether tax authorities will be targeting other foreign chambers of commerce soon.

“We can launch a tax audit only when there are reasonable allegations or evidence,” he said.

“We have to be careful as we don’t want the tax audits to be shown as discrimination against foreign investors. What we are doing is simply treating Korean and foreign groups equally under the law as the Korea Chamber of Commerce and Industry reports those types of income and is taxed for it.”

The EUCCK said that Jee Dong-hoon, a former secretary general of the organization, who was in charge of responding to the tax audit case, recently quit and now works for the Europe-Korea Foundation. The European chamber said that Jee’s resignation has nothing to do with the audit, but Jee had been investigated by the tax agency for allegedly being involved in tax evasion, according to sources.

“Jee said that he was investigated by tax officials. I think his resignation is related to the issue,” said an industry source familiar with the matter on condition of anonymity. <The Korea Times/Kim Jae-won>

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