N.Korea to Seize Property for Tax Evading Companies in GaeseongUpdated: 2012-11-27 00:00:00 (KST)
It is already a hard slog but South Korean firms doing business in North Korea now have an even harder timeas North Korea plans to impose a series of new tax regulations on the Gaeseong Industrial Complex.
North Korea unilaterally passed the regulations in August.
According to the new tax law, if a South Korean company does not pay its taxes North Korea has the legitimate right to seize the company's property at the complex.
And companies who delay the payment of taxes will have to offer North Korea some form of collateral to continue operating in the area.
[Interview : Cho Bong-hyun, Research Fellow
IBK Economic Institute] "The new law has serious flaws as it shows North Korea's motives to procure foreign currency and illegally claim the properties of South Korean firms in the complex by imposing taxes."
North Korea also plans to impose business taxes of 3 to 5 percent on subcontractors who make profits from companies at the complex.
[Interview : Kim Hyung-suk, Spokesperson
Ministry of Unification] "The new tax law does not match any investment and protection agreements made between the South and the North on behalf of the complex. The tax regulations are very unusual."
Nine out of the total 123 South Korean firms operating at Gaeseong have been slapped with hefty tax bills of up to 160-thousand U.S. dollars 200 times higher than the unpaid amount.
The South's Unification Ministry says it is negotiating with North Korea, but Pyongyang says it is legitimately imposing taxes on South Korean firms that have engaged in tax evasion.
Ji Myung-kil, Arirang News.
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