National Tax Service recovers 257.6 billion won in unfair stock market tax evasion, files 30 cases with prosecutors

[The Financial News] The National Tax Service has assessed additional taxes totaling 257.6 billion won on 27 entities involved in unfair practices in the stock market. Of these, 30 cases were referred to the prosecution service, and 16 cases were subject to summary disposition.
According to the National Tax Service on the 5th, a focused investigation conducted from July last year to February this year uncovered 615.5 billion won in underreported income. Based on these findings, the agency collected 257.6 billion won in additional taxes and issued 46 criminal tax penalty decisions.
Those investigated were found to have inflated share prices by issuing false disclosures about entering promising new business areas or by exaggerating company performance. After such announcements, they fabricated sham transaction documents to disguise their dealings.
In one case, a company announced that it would enter an eco-friendly energy business and then set up multiple paper companies as subsidiaries, claiming they would carry out the new business. It invested nearly 10 billion won under this pretext, then siphoned off the funds by preparing fake contracts and other documents. The company’s share price had surged on expectations for the new business, but later plunged due to the fallout from these illicit transactions, inflicting heavy losses on small shareholders, while the owner embezzled tens of billions of won in investment funds.
The owner used the money to enjoy a lavish lifestyle, including paying large lump-sum rental deposits and purchasing golf club memberships.
Another target of the investigation was a private moneylender known as a corporate raider, who acquired shares of a listed company under the names of relatives and took over management control using borrowed-name holdings. He then installed an associate as the nominal controlling shareholder and, using inside information about an impending change in control, manipulated prices through high-priced purchases and collusive trades. By doing so, he realized short-term trading gains and pocketed more than 8 billion won in illicit profits.
In a separate case, the owner of a listed company sought to transfer control of an unlisted company he dominated to his children at a bargain price. He mobilized employees to trade the unlisted shares on an over-the-counter platform at prices far below fair value. This artificially pushed the market price down to less than one-third of the actual value, after which he gifted the shares to his children, conferring tens of billions of won in benefits while underreporting gift tax through such schemes.
Going forward, the National Tax Service plans to continue follow-up investigations by closely monitoring overall stock market movements, including sudden price swings and abnormal trading patterns. The agency stated that it will track unfair trading in the stock market to the end and respond with strict enforcement.
In clear cases of unfair trading, the investigation scope will be expanded to include chief executives and related parties to thoroughly examine whether there have been irregular transfers of control or similar practices. If, during investigations, acts such as destruction of books and records, manipulation or concealment of transactions, or concealment of assets are identified as criminal tax offenses, the National Tax Service plans to file complaints with investigative authorities so that those involved face criminal penalties, including imprisonment and fines.
Ahn Deok-su, Director General for Tax Investigation, National Tax Service, emphasized, "The National Tax Service will continue to take a firm stand against cheating, privileges, and unfair trading in the stock market that undermine people’s livelihoods. We will do our utmost to ensure that the stock market serves as a core platform for channeling funds, which are now concentrated in real estate, into productive areas such as corporate investment."

syj@fnnews.com Reporter Seo Young-jun Reporter