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South Korea Tax Agency Turns its Radar on Do Kwon’s Terraform Labs

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The tax watchdog of South Korea, the National Tax Service has accused the CEO of Terraform Labs, Do Kwon, and his company of corporate and income tax evasions after infallible proof was presented. According to local news Naver, the total amount charged for the offense is 100 billion won, approximately $78 million.

While the tax regulator had previously collected tax fees amounting to hundreds of billions of won from the Terra CEO and his company, the new penalty fine became inevitable as evidence of the intentional liquidation of some of Kwon’s domestic assets for the purpose of evading tax was proven.

According to the report, the National Tax Service also confirmed that Do Kwon had plans to exit the country, for the same purpose of avoiding his tax obligations.

Kwon and his business partner, Shin had previously told the tax regulator that they had no stake in the shares of his company’s branches abroad, but this fact was proven to be misleading and false. 

Evidence showed that Kwon has a 92% stake in the Singapore branch of Terra and Shin has an 8% stake. This misconception of facts turns out to be totally unacceptable by the National Tax Service.

On the Virgin Islands branch of the business, Terra Virgin, the tax regulator will be imposing an income tax of 4.66 billion won and a corporate tax of 44.47 billion won in response to an investigation that was carried out back in October 2021.

The outskirt branches of the business could have been exempted from taxes, but the National Tax Service noted that despite the fact that these companies are based abroad, they are still perceived as “domestic corporations” as their operations are largely carried out in South Korea.

The report further noted that the provisions of the Corporate Tax Act stipulated that, “the actual place of management is determined in consideration of the fact that, even if it is an overseas corporation, decision-making is made in Korea, and the registered directors are composed of Koreans and residents.”

Following the remarkable fall that hit his Network in the past weeks, causing remarkable losses for investors across the world, the Terra boss has since been receiving several hits from all sides.

Reports have it that Kwon will also be charged to court by a group of investors in LUNA who have been remarkably affected by the crash of the Terra Network.

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