South Korea’s Largest Individual Tax Debtor Agrees to Pay After 15 Years
Shipping executive Kwon Hyuk has paid 100 billion won and pledged five overseas vessels as collateral toward a 393.8 billion won tax bill, marking a major test of South Korea’s cross-border tax enforcement.
South Korea’s largest individual tax debtor has agreed to settle 393.8 billion won ($294 million) in unpaid taxes, ending a 15-year standoff that pushed tax authorities to pursue assets registered overseas.
The National Tax Service said Wednesday that Cido Shipping Chairman Kwon Hyuk paid 100 billion won in cash in July and offered five vessels located abroad as collateral for the remaining balance. Kwon plans to pay the rest in installments. The agency said the ships appeared to be worth more than the outstanding amount, although officials did not disclose their assessed value or a timetable for completing the payments.
National Tax Service Commissioner Lim Kwang-hyun said the 100 billion won payment was the largest amount the agency had collected from an individual with overdue taxes. The previous record was about 50 billion won. Kwon and three companies connected to him have been listed as owing a combined 790.2 billion won, but part of that figure reflects the same liabilities counted against both Kwon and the companies. The corporate obligations tied to his case will be cleared once his full personal balance is paid.
The dispute dates to a 2011 tax investigation. Authorities concluded that Kwon was liable for Korean taxes as a domestic resident despite his claim that he lived overseas. Kwon challenged that determination in court, but the Supreme Court ruled against him roughly two years ago. Tax officials subsequently intensified efforts to identify and secure assets outside Korea.
The agency worked with tax authorities in Liberia and Panama, jurisdictions where many of Kwon’s ships are registered. Because officials found no assets under his name in Korea, they agreed for the first time to accept overseas vessels as collateral. The National Tax Service has asked the Board of Audit and Inspection for guidance on the arrangement, reflecting the unusual legal and administrative issues involved in securing movable assets across borders.
Lim said Kwon received no leniency in criminal proceedings in exchange for the payment agreement. Authorities will decide whether to lift a travel ban after valuing the vessels and receiving the audit board’s assessment. The case highlights both the difficulty of collecting large tax debts from internationally structured businesses and the government’s growing use of cooperation with foreign tax agencies to trace assets and enforce domestic obligations.