From Yonhap News Agency

SEOUL, July 21 (Yonhap) — South Koreans have directly invested over 16 trillion won in overseas tax havens over the past five years, a lawmaker said Sunday, citing government data.

Rep. An Min-suk of the main opposition Democratic Party, releasing data obtained from the National Tax Service, the Korea Customs Service and other government agencies, said South Korean individuals and enterprises funneled 16.15 trillion won (US$14.4 billion) in direct investment into a number of overseas tax havens, including the Cayman Islands, Bermuda, the Philippines and Singapore, between 2008 and 2012.

The amount of direct investments into the tax havens totaled $2.43 billion in 2008, $1.86 billion in 2009, $3.73 billion in 2010, $3.29 billion in 2011 and $3.09 billion in 2012, according to the data.

The five-year direct investment of over 16 trillion won accounted for 12 percent of their entire overseas investment of $118.2 billion in the same period, the data showed.

Large conglomerates accounted for 78 percent, or $11.28 billion, of the tax haven direct investment.

By region, the Philippines attracted the largest amount of $932 million, followed by Malaysia with $659 million, the Cayman Islands with $476 million, Panama with $330 million and Singapore with $307 million.

“The authorities should closely monitor whether the growing direct investments into overseas tax havens are related to wealth flight,” said an official close to Rep. An.

A tax official in Seoul said direct investments into tax havens cannot always be seen as related to wealth flight or tax evasion, but the authorities will further strengthen oversight of overseas capital flows.

Earlier this month, a parliamentary report found that South Koreans have sent more than US$5 billion overseas, including to at least three tax havens, in the last five years.

The amount of foreign currency-denominated funds transferred by individuals and businesses to tax havens abroad between 2008 and 2012 reached US$5.06 billion (5.78 trillion won), according to the report by the Bank of Korea (BOK) submitted to parliament.

The report is based on the BOK’s data on remittances by 109 individuals and 796 businesses who transferred money worth $1,000 or more per transaction in the past five years, the report said.

A lawmaker who requested the BOK for such data called on regulatory authorities to step up efforts in keeping closer tabs on the movement of funds based in tax havens, since they may be involved in possible tax dodging.

The money was mostly wired to three tax havens: the Cayman Islands, the Bermudas and the Virgin Islands, the report said.

The amount of money transferred to tax havens has been on the rise, more than doubling to $1.37 billion as of end-2012 from $556 million in 2009.

The number of companies set up in the tax haven regions jumped to 175 as of last year from about 140 tallied during 2008-10, the report said.

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PHOTO: President Park Geun-hye’s government has pledged to crack down on tax evasion to fund her pledges to boost welfare spending. Photo: EPA