By Kim Yon-se
Staff Reporter


The National Tax Service (NTS) sad it is carrying out tax audits of six foreign funds, including the Carlyle Group and Lone Star Funds, to check for possible tax evasion.

In the National Assembly’s audit of the tax authority Thursday, NTS Commissioner Lee Ju-sung said that the tax agency will ``wrap up its investigations by the end of the year.’’

Lee said two large and four small- and mid-sized foreign funds are being investigated by the tax authority for the past few months. It is the first time that the NTS has disclosed that it is also auditing four smaller foreign funds in addition to Carlyle and Lone Star.

Rep. Sim Sang-jeong of the opposition Democratic Labor Party asked Lee whether Goldman Sachs, AIG and Westbrook are included in the list of funds being investigated.

However, Lee did not disclose the names of four small-to medium funds it is auditing.

Lee expressed his commitment to revealing the allegations that the funds have reaped unfair gains and dodged taxes in transactions of stocks and other assets.

``We will do our best as the cases are drawing keen attention from the public,’’ Lee said.

Asked about whether the NTS will refer the cases to the prosecution by Rep. Sim, the commissioner said the tax authority said it is difficult to reply at this stage.

``It’s difficult to answer for now whether we will refer the cases to the prosecution. We will judge in accordance with the results of our investigations,’’ he said.

Lee hinted at taxation of some of the overseas funds in the near future, saying that he believes there are few problems regarding the application of tax laws.

He added that taxation against foreign funds will be conducted according to rules set by the Organization for Economic Cooperation and Development (OECD).

The tax audits on foreign investment funds have come amid public criticism that many of them did not pay a ``penny’’ in taxes even after they took home billions of dollars in capital gains from acquisition of distressed financial firms and enterprises following the 1997 currency crisis.

Since the NTS launched an audit of a group of foreign equity funds, foreign economists argue that the stiff stance against foreign funds will be a hurdle for South Korea in its efforts to become a financial hub in Asia.

kys@koreatimes.co.kr