Authorities clamp down on foreign tax evaders amid growing scrutiny

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Authorities clamp down on foreign tax evaders amid growing scrutiny

Published: 07 Aug. 2025, 17:11

Audio report: written by reporters, read by AI

Min Ju-won, head of the Investigation Bureau at the National Tax Service (NTS), speaks at a briefing at the NTS headquarters in Sejong on Aug. 7 regarding a tax probe into foreign nationals suspected of tax evasion after purchasing high-priced apartments in three districts in southern Seoul. [YONHAP]

Dozens of foreign nationals have come under scrutiny by Korea’s tax authorities for acquiring high-end apartments in Seoul’s upscale districts through illicit means, including disguised gifts and undeclared income.

The National Tax Service (NTS) announced Thursday that it launched tax audits into 49 foreign nationals suspected of property-related tax evasion.

The individuals include 16 suspected of acquiring real estate through disguised gifts, 20 accused of using undeclared income for purchases, and 13 under investigation for omitting rental income in tax filings.

Nearly 40 percent of the subjects are Korean descendants, and most of the foreign nationals are from the United States and China. The suspected amount of tax evasion reaches approximately 300 billion won ($217 million).

Roughly 70 percent of the 230 properties acquired by the individuals in question are concentrated in the affluent Gangnam, Seocho and Songpa districts in southern Seoul.

A large portion of the cases involve funds acquired through indirect gifting by parents or spouses. Residents in Korea — whether Korean nationals or foreigners — are required to file gift tax returns and pay the appropriate taxes when receiving such financial support.

“Some attempted to evade the tax surveillance system by alternating between using a foreign registration number and a passport number,” said Min Ju-won, deputy commissioner of the NTS Investigation Bureau. “They also exploited the fact that tax authorities have limited access to overseas accounts.”

Apartment buildings in the Gangnam, Seocho and Songpa Districts are pictured on July 3. [YONHAP]

Authorities also uncovered cases involving corporate structures used for tax evasion.

One foreign national reportedly established an electronics trading company in Korea and created a shell company in an Asian tax haven.

The foreign national fabricated transactions by pretending to purchase goods from the offshore company, funneling payments that allowed them to evade corporate taxes. The suspect later repatriated the hidden funds and purchased high-end real estate, including an apartment in central Seoul’s Yongsan District now worth over 10 billion won.

Tensions have been rising over what critics call “reverse discrimination,” as Korea restricts domestic borrowing above 600 million won for housing purchases while foreign nationals remain able to access overseas financing without similar limits.

Tax authorities view foreign buyers as exploiting regulatory blind spots and distorting the housing market. They plan to push for policy reforms by raising the issue with the Ministry of Economy and Finance and the National Assembly.

One proposal under discussion would eliminate tax exemptions for rental income currently offered to non-resident foreign nationals who own a single property.

Another would disqualify foreigners who have lived in Korea for less than five years from receiving capital gains tax exemptions and long-term ownership tax deductions.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY JANG WON-SEOK [[email protected]]