South Korean corporate tax laws state that foreign-registered businesses are considered domestic if they are based in the country.
In the aftermath of the Terra ecosystem’s collapse, Terraform Labs and Do Kwon continue being in legal trouble. The national tax agency has placed the crypto company under surveillance after early reports of a possible congressional inquiry and an investigation by Grim Reapers’ financial crimes unit.
A report published in Naver news states that South Korea’s tax agency has penalized Terraform Labs founder and co-founder with a 100 Billion won ($78 Million) tax evasion penalty.
According to the report, Kwon was dissatisfied with crypto taxation in the nation since December last year and attempted to liquidate Terra’s domestic operations right before the horrendous LUNA crash.
Terraform Labs was first suspected of evading income and corporate tax in June 2013. Terraform Labs was found to be registered in both Singapore and the Virgin Islands.
Both the subsidiaries were registered overseas, but the “place of actual management” was South Korea. Korea’s corporate tax law states that the place of actual management will be considered for tax purposes, regardless of whether it is the registered country.
After Terraform Labs sent Luna (from Terra Singapore to Luna Foundation Guard) to offset the loss of anchor protocol, tax authorities were notified.
In October, Terra’s Virgin Islands subsidiaries were fined 4.66 Billion Won ($3.6 Million) in income tax and 44.7 Billion Won ($34.7 Million) in corporate tax.
In the wake of the LUNA disaster, South Korea’s policymakers and law enforcement agencies have taken a heavy hit on Do Kwon along with his associates. After 2.5 years, a special unit for investigating financial crimes called “Grimreapers of Yeouido”, was recalled to investigate the matter.
