HSBC Implicated in Tax Evasion
By Kim Yon-se - Staff Reporter
HSBC has not paid the taxes due on tens of billions of won it gained as a result of transactions of shares in 2002 and 2003 in a small Korean company via its equity fund, officials from tax agencies said.
HSBC had acquired PKL, a Korean manufacturing firm in Chungchong Province, by establishing a paper company in Labuan, Malaysia, and sold it several years later. This is a very similar process to the case of Newbridge Capital, which reaped huge gains and paid no taxes after trading Korea First Bank via Labuan. According to the National Tax Service (NTS), the bank has evaded capital gains taxes amounting to 7 billion won after handing over the management rights of the Korean company.
The tax authority ordered the fund to pay back taxes and penalty taxes in 2003, but HSBC has refused to pay a penny and filed a complaint with the National Tax Tribunal. HSBC’s equity fund is HSBC Private Equity Management.
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