Korean Tax Commissioner quits early

The storm over foreign private equity investment in Korea claims another scalp as tension is reported to be rising between the government and the tax service.

Lee Ju-Sung, Korea’s National Tax Service commissioner, has tendered his resignation, cutting short his two-year term by eight months and prompting speculation over the reasons behind his premature departure, according to Korean media reports.

 

The Korea Times reported Lee saying in a statement: “I decided to resign as I determined now is the best time to wrap up my job.” However, according to sources close to the tax service cited in The Korea Herald, the resignation has shed light on Lee’s ‘constant friction with the finance ministry’, a strong proponent of foreign investments.

 

Lee rose to prominence over the unprecedented tax investigations he initiated into foreign private equity funds. Last week auditors cleared Lone Star, a Texan firm, of impropriety but declared the buyout group had been an ‘unqualified’ buyer of Korea Exchange Bank in 2003, endangering the bank’s proposed, lucrative sale to a rival.

 

But the probe into the tax-free sale of Korea Exchange Bank has drawn praise as well as censure, according to the Herald.

 

Lee’s investigations prompted the Board of Audit and Inspection, an independent watchdog, to conduct a three-month probe. This has now passed to the Korean Supreme Prosecutor’s Office.

 

Korea is also looking to tax profits generated by foreign companies registered in Malaysia’s offshore tax haven Labuan, according to Korea Economic Daily.

 

In May, Korea revised its international tax law, amid efforts aimed at closing loopholes that allowed foreign funds to make tax-free gains when they traded domestic assets.