South
Korea and Hong Kong have reached an agreement to share tax
information, particularly on those South Koreans suspected of having
undeclared funds in Hong Kong.
The
South Korean Ministry of Strategy and Finance announced the reaching
of the deal between the two countries' tax authorities – Hong
Kong's Inland Revenue Department (IRD) and South Korea's National Tax
Service (NTS) – under which South Korea will obtain access to
account information held by financial institutions in Hong Kong.
The
agreement comes at a time when, in a bid to reduce the incidence of
tax evasion, the NTS is proposing to impose heavier fines on those
South Korean residents who are found to hold substantial unexplained
financial accounts in overseas jurisdictions. South Koreans with
overseas financial accounts worth more than KRW1bn (USD924,000) would
be obligated to report the assets, and to explain the sources of the
funds, or pay at least a 10 percent fine.
The
deal between the IRD and the NTS will require parliamentary approval
in both countries before it can be officially signed, but it is hoped
that it will enter into force next year.
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