Hankook Tire owners lose hidden assets lawsuit

The family ownership of Hankook Tire and Technology must pay a fine of KRW 4.59 billion (£2.9 million) after losing a lawsuit related to foreign assets. Seoul-based publication The Korea Herald writes that the Seoul Administrative Court recently ruled against the lawsuit brought by Cho Yang-rae, honorary chairman of Hankook & Co., and his eldest son Cho Hyun-sik.

The two men allegedly hid assets outside of South Korea, but both argued that opening a foreign bank account to deposit financial assets and profits through investments is legal. The Korea Herald quotes the father and son as stating: “We simply omitted reporting financial income (by mistake). But it was not an attempt to actively seek a way to hide assets.”

Accounts in Switzerland & Luxembourg

The court ruling indicates overwise and claims that the plaintiffs deliberately hid assets and income in order to hinder the authority’s collection of taxes. “Since 1990, when Cho Yang-rae first opened a bank account in Switzerland, (Cho Yang-rae and Cho Hyun-sik) set up an additional four foreign accounts until March 2016. But none of them were reported (to the tax agency),” the newspaper reports the court as saying.

The court added that as the plaintiffs have no business interests in Switzerland or Luxembourg, there was no convincing reason for them to use international banks rather than a Korean bank, except for tax evasion.

The Seoul regional office of the National Tax Service imposed income tax and additional tax on Cho and his son in 2019, stating that they had failed to report income added to foreign bank accounts from 2008 to 2016. Cho Yang-rae must pay KRW 1.98 billion and Cho Hyun-sik KRW 2.61 billion. This figure represents what the two should have paid in income tax as well as an additional tax rate of 40 per cent as a penalty for understating their income.

The Korean Herald concludes its reportage by commenting that Hankook Tire and Technology “declined to comment on whether Cho and his son are planning to appeal.”