Kwon Hyuk, known as the 'Shipping Magnate,' has committed to settling his personal tax debt of 3.938 trillion won, which has been outstanding for approximately 15 years, by making an initial cash payment of 1 billion won. He has also offered five overseas ships as collateral for the remaining amount.
The National Tax Service (NTS) plans to establish special investigation teams across local offices to conduct tax audits and track delinquent payments, based on the achievements of its high-value delinquency task force's overseas asset tracking.
During a briefing on the operations of the high-value delinquency task force on October 7, NTS Commissioner Lim Kwang-hyun stated, "Kwon has made an initial cash payment of 1 billion won and has provided overseas ships as collateral to expedite the payment of the remaining amount."
Previously, Kwon submitted a payment plan for the remaining balance of 2.938 trillion won after making the initial cash payment in July. This marks significant progress in the collection of the highest delinquent tax case, which had remained unresolved since a comprehensive income tax notice was issued in 2011. The cash payment is the largest ever recorded for a single delinquent tax case.
The five overseas ships offered as collateral are currently undergoing a valuation assessment. This is the first instance of providing overseas ships as collateral due to the absence of domestic assets in the taxpayer's name, and the NTS is also conducting pre-consultations with the Board of Audit and Inspection to ensure compliance with active administrative measures.
Ryu Chung-sun, the NTS International Tax Management Director, noted, "Preliminary evaluations suggest that the value of the ships provided as collateral exceeds the delinquent amount."
The total designated delinquent amount related to Kwon includes both his personal tax debt and the secondary tax obligations of related corporations, totaling 7.902 trillion won. This figure includes amounts that are counted twice due to the designation of corporations to pay taxes on behalf of individuals who fail to do so. The NTS explained that settling the personal tax debt of 3.938 trillion won would also extinguish the secondary tax obligations assigned to the corporations.
The specific timeline for full payment has not been disclosed. Commissioner Lim stated, "Collateral has been provided for the remaining portion, and a payment plan has been submitted. There is a possibility of making payments sooner than initially planned using income generated from business activities."
This payment was made possible through the tracking efforts of the high-value delinquency task force, which was established in January this year. The NTS has focused on tracking and recovering overseas hidden assets to reduce high-value and malicious delinquencies.
The task force dispatched a delegation to understand overseas corporate structures and held urgent information meetings. They strengthened cooperation on collection and information exchange with tax authorities in countries such as the United Kingdom and Liberia, and received assistance in obtaining ship-related information from Panama.
They also reviewed the feasibility of seizing and enforcing overseas assets. Through analysis of domestic and international case law, research projects, and legal consultations, they examined legal issues and devised a method to secure overseas ships as collateral, considering the taxpayer's willingness to make cash payments through economic activities.
The NTS explained that this approach could reduce the potential for prolonged legal disputes and social costs that may arise during the enforcement of overseas assets while allowing for the collection of delinquent amounts. They anticipate that the delinquent amounts will be settled either through planned payments or the forced seizure of collateral.
However, when asked whether there had been prior discussions regarding criminal penalties in exchange for payment, Commissioner Lim emphasized, "We will execute according to the law and principles, and there can be no promises made with the taxpayer, nor should there be." He added that further review is needed regarding the lifting of any travel bans.
Meanwhile, the NTS plans to promote additional promotions for employees who contributed to the task force's activities following the mid-year promotions. This aims to enhance employees' commitment to addressing delinquencies through rewards for tracking and collection achievements.
The organization will also strengthen its response at the institutional level. To continue the task force's achievements, special investigation teams will be established in irregular investigation departments across local offices, including the Seoul Regional Tax Office's Investigation Division 4.
The special investigation teams will investigate whether major delinquents are evading tax enforcement and will conduct additional irregular tax audits on delinquents and related corporations suspected of tax evasion through capital outflows. To this end, the NTS plans to select and assign outstanding personnel in areas such as tax investigations, asset investigations, legal reviews of seized items, and the collection and utilization of offshore information between November and December.
Commissioner Lim expressed hope that this case would have a positive influence, encouraging delinquents to voluntarily pay their taxes before forced collection. He affirmed, "We will track down delinquent assets until they can no longer be hidden anywhere in the world and ensure collection."
* This article has been translated by AI.
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