CCMP faces $32m South Korean tax bill(2)

CCMP Capital Asia has been hit with $32 million tax bill from the South Korean authorities, in the latest setback for private equity firms active in the country.

The South Korean government has demanded 30 billion won ($32 million) in back taxes from a portfolio company of buyout firm CCMP Capital Asia, amid an increasingly unfriendly environment for private equity firms operating in the country.

The authorities said today that Mando Corp, a South Korean auto-parts maker bought by CCMP and UBS in 1999, had not paid enough taxes between 2002 and 2006.

Mando had only paid a 10 percent tax on its dividend earnings, an official said, but since one beneficiary of these dividends was not based in the country, it should have paid the full 25 percent rate. Along with punitive charges, this would total 30 billion won.

The government is looking to close down tax loopholes that many in the country believe have made it easy for foreign investment firms to make massive gains on buyout deals. The move comes amid growing nationalistic opposition to the firms concerned.

A Mando spokesman told Reuters that its owners still had the right to appeal against the decision.