North Korea to seize property for tax evading companies in Gaeseong Industrial Complex

South Korean firms doing business in North Korea now have harder times

North Korea unilaterally passed a series of new tax regulations on the Gaeseong Industrial Complex in August 2012. According to the new tax law, if a South Korean company does not pay its taxes North Korea has the legitimate right to seize the company’s property at the complex. And companies who delay the payment of taxes will have to offer North Korea some form of collateral to continue operating in the area.

North Korea also plans to impose business taxes of 3 to 5 percent on subcontractors who make profits from companies at the complex.

Nine out of the total 123 South Korean firms operating at Gaeseong have been slapped with hefty tax bills of up to 160-thousand U.S. dollars 200 times higher than the unpaid amount.

The South’s Unification Ministry says it is negotiating with North Korea, but Pyongyang says it is legitimately imposing taxes on South Korean firms that have engaged in tax evasion.