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A map showing major tax havens around the world

Around 30% of South Korea’s 42,692 individual and corporate investors from overseas have citizenship in tax havens, data show.

The investors’ domestic stocks and bonds were also found to account for around 30% of total holdings by foreign investors.

National Tax Service and Financial Supervisory Service data released on Oct. 2 by National Assembly Strategy and Finance Committee member Park Kwang-on showed a total of 42,692 foreign investors in South Korea as of August, with a plurality of 14,243 holding US citizenship.

But a comparison of the investors’ nationalities with a list of tax havens provided by the Korea Customs Service showed 12,785 to have citizenship in tax havens, including the Cayman Islands (3,274), Canada (2,459), Luxembourg (1,768), the Virgin Islands (877), Bermuda (362), and the Bahamas (147). Together, they accounted for 29.9% of all foreign investors. With no statistics to capture other regions categorized as tax havens - including the US state of Delaware - the total number could be even higher, Park said.

The investors accounted for 163.6911 trillion won (US$148.6 billion) in South Korean stocks (132.4044 trillion won/US$120.2 billion) and bonds (31.2867 trillion won/US$28.4 billion), or roughly 30% of the 553 trillion won (US$502 billion) owned by all foreign investors in South Korea, Park explained. In Luxembourg, six corporations or individuals were found to have one trillion won (US$908 million) or more in South Korean stocks, while 480 investors with Luxembourg citizenship owned a total of 29.3005 trillion won (US$26.6 billion) in stocks. One investor with Singaporean citizenship owned 16.5098 trillion won (US$15.0 billion) in stocks, Park added.

“Tax havens are places where corporations and individuals flock to avoid paying taxes by way of shell corporations,” Park said.

“Since this could result in tax evasion, stock price manipulation, and other unfair transaction practices, there needs to be stronger international coordination to monitor the market, including exchanges of financial and tax information between countries,” he argued.

By Song Kyung-hwa, staff reporter

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