Korean tax office to gain access to Swiss bank accounts

The National Tax Service (NTS) said Thursday that it will be able to gain access to Swiss bank accounts held by Korean citizens, which it expects will help detect illegal slush funds and prevent overseas tax evasion.

The tax office said the National Assembly ratified a revised treaty with Switzerland earlier this week that permits sharing of financial and tax-related information between the two nations. The Swiss parliament is expected to endorse it in June.

“We can examine Koreans’ Swiss bank accounts under the treaty. It will play a critical role in discovering slush funds and illegal capital hidden in the European country,” said Park Yun-jun, an assistant commissioner of the NTS.

Park said such a move will revolutionize its ability to cope with tax evaders.

“We have often found that tax evasion suspects have bank accounts in Switzerland, but could not investigate them to date. With the revised tax pact, we can resolve these problems,” he added.

Many Korean businessmen and rich people have been suspected of hiding their assets in Switzerland in an effort to evade taxes. The funds are also used for illegal inheritance transfers without paying the appropriate taxes.

The NTS has been cracking down on illegal capital outflow and overseas tax evasion since its former commissioner Baek Yong-ho took the helm of the agency in July 2009. The current NTS Commissioner Lee Hyun-dong followed in Baek’s footstep and has been emphasizing the issue.

In addition, the NTS said the bilateral pact will fuel business activities by lowering the overall tax burden on companies and individuals in such areas as dividend earnings, returns on investment and real estate holdings.

This is a big change for Switzerland which had refused to reveal bank customers’ information under the principle of banking privacy guaranteed by its constitution. The country gained notoriety as a tax haven for the rich seeking to avoid their legal obligations.

But Geneva was forced to unlock its doors as foreign governments and international organizations, especially the United States and the Organization for Economic Cooperation and Development, pressured it to do so by imposing fines on Swiss banks and filing lawsuits against them.

The Internal Revenue Service, the tax agency of the U.S., collected financial information on 4,450 American citizens’ accounts with Swiss banking giant UBS in 2009 and 2010 after winning a legal dispute.

The U.S. threatened to shut down UBS’s businesses in the country if the world’s biggest private bank refused to submit the information. <Korea Times/Kim Jae-won >

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