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S. Korean business groups have 237 firms in tax havens

June 25, 2015
.(AP Photo/Ahn Young-joon)

Samsung is one of many South Korean businesses that have multiple tax havens from Hong Kong to the Cayman Islands.(AP Photo/Ahn Young-joon)

SEOUL, June 25 (Yonhap) — More than half of big business groups in South Korea have set up companies in overseas tax havens, with SK Group, the nation’s third-largest conglomerate, having the most, data showed Thursday.

Out of 61 business groups with combined assets of more than 5 trillion won (US$4.5 billion), 33 owned a combined 237 subsidiaries in countries on the European Union’s tax haven blacklist as of end-2014, according to the data compiled by corporate tracker Chaebul.com.

The figure accounts for 7.5 percent of the total number of overseas firms set up by the groups.

The EU list of 30 territories includes Hong Kong and a series of Caribbean havens, including the Cayman Islands and British Virgin Islands, which impose no corporate taxes or set very low tax rates.

Hong Kong, which levies a 16.5 percent corporate tax, was the most popular domicile with 140 Korean paper companies. The Cayman Islands had 49 letterbox firms, followed by 19 in Panama and 14 in the Virgin Islands, the researcher said.

SK Group, whose businesses range from energy and telecom to finance, had the largest number of shell companies in low-tax jurisdictions with 69, accounting for 24.3 percent of the total.

Except for three shipping companies located in Panama, most other branches under SK were registered as investment and financial consulting firms.

Lotte Group, the operator of retail chains, hotels and duty free shops, came next with 38 shell companies in such countries as Hong Kong, the Virgin Islands and the Seychelles.

Samsung Group, the nation’s top conglomerate, had 16 offshore units in Hong Kong, three in Panama and one in the Cayman Islands, according to the data.