SEOUL : The Government of Singapore Investment Corporation, or
GIC, is under scrutiny in South Korea for possible tax
breaches.
The probe is over GIC's purchase of one of the country's most
expensive properties, in downtown Seoul.
GIC says it is unaware of any investigation.
Star Tower, in the heart of Seoul's Kangam business district, is
one of the largest office buildings in South Korea.
In December, GIC bought the 45-storey freehold building from US
fund Lone Star for US$950 million, a record price for a
building.
According to local media reports, GIC bought the building through
two separate subsidiaries, one buying 50.01 percent and the other
acquiring 49.99 percent.
By each avoiding the 51 percent stake mark, GIC saved about US$43
million in local property taxes.
The National Tax Service says it is looking into the massive
transaction and is expected to release a report in late June.
Seoul's metropolitan government is waiting for this report before
deciding on its next move.
Said Kwon Oh Do, director (tax collection department) of the Seoul
Metropolitan Government, "We think we should levy at least the
minimum amount of tax. Not all acquisition and registration taxes
will be levied as if the transaction was a transfer of the
ownership. But if the companies are considered majority owners then
they will need to pay an acquisition tax, though not a registration
tax.
"The amount will be minimal. Even though it's minimal, we think it
will be appropriate to keep balance with domestic companies."
GIC, which has been expanding aggressively into the Korean property
market since 1999, already owns six buildings in Seoul. - CNA
/ct