Money Flowing to Tax Havens Approaches 40 Trillion Won... Large Corporations Account for 44%

Over the past five years, the amount of funds remitted from South Korea to major global tax havens has approached 40 trillion won.

According to data submitted by the Bank of Korea to Shin Young-dae, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, the total overseas remittances to 15 major tax havens from 2020 to the first half of this year amounted to 39.0341 trillion won.

The 15 tax havens include those announced by the European Union (EU) in February as "countries uncooperative in tax information sharing or those that have not fully met sharing obligations," with the addition of representative tax havens such as Bermuda, the Cayman Islands, and the Marshall Islands.

Annual overseas remittances to tax havens surged starting in 2022. The annual overseas remittance amount slightly decreased from 7.0894 trillion won in 2020 to 6.7462 trillion won in 2021. It then surpassed 10 trillion won in 2022, reaching 10.6479 trillion won, and recorded 10.3831 trillion won last year.

By region, excluding Russia (2.1799 trillion won), which includes energy import payments, the Cayman Islands (1.6964 trillion won) had the highest amount as of the first half of this year.

Following were Bermuda (113.1 billion won), Panama (88.1 billion won), Guam (65.1 billion won), Trinidad and Tobago (8 billion won), Fiji (5.9 billion won), and the United States Virgin Islands (3.6 billion won).

The Cayman Islands do not impose corporate tax, income tax, or inheritance tax, accounting for nearly half of all remittances to tax havens each year. Of the total remittances to the Cayman Islands, 44.5% or 754.8 billion won were large remittances of over 10 million dollars sent at once.

By company size, as of the first half of this year, large corporations accounted for the largest share of remittances to tax havens at 44.4%. This was followed by public corporations (20.1%), others including financial corporations (21.6%) totaling 41.6%, small and medium-sized enterprises at 12.5%, and individuals at 1.4%.

Representative Shin said, "The outflow of domestic capital overseas is a serious situation," and added, "The government must thoroughly investigate and monitor whether companies are engaging in tax evasion."