This morning one news article got my eyes on. The news reported that Hana Bank, one of the largest bank in Korea, is expected to be forced to pay up to 1.7 trillion won ($1.8 billion) in penalty taxes for unfair corporate income tax evasion in the course of a merger with the Seoul Bank back in 2002.
According to the news, the Ministry of Finance and Economy has ruled that the merger between Hana Bank and Seoul Bank involved illegal tax evasion. The MFE regarded the merging of two Banks as a “reversed merger”, which means a company in the red, Seoul Bank, pretends to be purchasing Hana Bank, which was in the black, when in fact it was other way round. By doing so, Hana Bank, the actual acquirer, could save corporate income taxes.
Korea’s financial authority approved the merger between Hana and then-struggling Seoul in 2002. Hana Bank is objecting to MFE’s decision. Hana bank said it completed the deal based on the government’s guidelines Hana Bank also commented that they will pay taxes if the National Tax Service levies them. However, they will take all legal means available to get the money back.
I’ll update any progress on this issue later. You can read the original news article here.
© 2008 Wonil Chung, a Korean Business Lawyer/Chung & Partners, a Korean Business Law Firm. All rights reserved. Some copyrights, photos, icons, trademarks, trade dress, or other commercial symbols that appear on this post are the property of the respective owners.