Hyuk Kwon, the founder of Cido Shipping, has offered five oil tankers as collateral to settle his personal tax debt of 393.8 billion won ($277 million) in South Korea. This agreement brings an end to a 15-year dispute with the South Korean tax authorities.
Debt Settlement Details
The National Tax Service of South Korea has announced that Kwon has submitted a plan to pay the full amount of the debt and made a cash payment of 100 billion won ($70 million) in July. The five oil tankers have been offered as collateral for the settlement of the remaining amount, although the names of these vessels have not yet been disclosed.
Assessment and Pressure on Kwon
South Korean tax authorities have stated that initial assessments have shown that the value of these five oil tankers exceeds the remaining debt. This is the first time this agency has accepted foreign vessels as collateral in such cases.
Kwon, who has turned Cido into one of the largest private shipping groups in Asia, has faced tax assessments since 2011. The main dispute was over whether he should be recognized as a resident of Korea for tax purposes. Kwon claims he is a foreign resident and that his shipping companies are also foreign entities, while South Korean tax authorities hold a different view.
Tensions in this case peaked after Supreme Court sessions and the tax debt was finalized. Additionally, South Korean tax authorities have pursued three related companies along with Kwon's personal debt, raising the total value of related debts to 790.2 billion won ($556 million).
This action to offer five vessels as collateral follows intensified efforts by South Korean authorities to track Kwon's foreign assets. The National Tax Service established a special unit this year and has sought cooperation from foreign tax and registration authorities, including in Liberia and Panama.
Kwon founded his shipping company around 1990 and moved Cido's headquarters to Hong Kong in 2004. The company has been active in the shipbuilding market and recently ordered four new VLCC oil tankers from HD Hyundai. Cido is also implementing a fleet renewal program for car carrier ships.
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