Family-owned Hankook Tire loses overseas asset concealment lawsuit

Hankook Tire and Technology company logo (Hankook Tire and Technology)

Family-owned Hankook Tire and Technology, the world’s sixth-largest tire maker, lost a lawsuit against the local tax agency over a 4.59 billion won ($3.5 million) fine for allegedly concealed assets abroad.

The Seoul Administrative Court recently ruled against the lawsuit filed by Cho Yang-rae, honorary chairman of Hankook & Co., the parent company of Hankook Tire, and his eldest son Cho Hyun-sik, an adviser to Hankook & Co.

Cho and his son argued that opening a foreign bank account to deposit financial assets and profits through investments is legal, saying, “We just failed to report the financial income (by mistake ). But it wasn’t an attempt to actively search for a way to hide assets.

But the court said in its decision that the plaintiff made it difficult for the tax authority to impose and collect taxes by deliberately hiding financial assets and income.

“Since 1990, when Cho Yang-rae first opened a bank account in Switzerland, (Cho Yang-rae and Cho Hyun-sik) opened four additional foreign accounts until March 2016. But none of them between them has been reported (to the tax authorities). ),” the court said.

The court added that the plaintiff had no business interests in Switzerland or Luxembourg and that there was no compelling reason for him to use international banks rather than a national bank, except for tax evasion. .

The National Tax Service’s Seoul regional office imposed income tax and additional tax on Cho and his son in 2019, saying they failed to report income added to foreign bank accounts from 2008 to 2016.

The tax agency ordered Cho Yang-rae to pay 1.98 billion won and Cho Hyun-sik to pay 2.61 billion won. The tax imposed includes what both would have had to pay in income tax and an additional tax rate of 40% as a penalty for understating the income to the tax authorities.

Hankook Tire and Technology declined to say whether Cho and his son were considering appealing.

By Byun Hye-jin ([email protected])