Finance Minister of South Korea has prepared a list of «tax havens», from which investors will not be able to take advantage of favorable tax treaties.

According to the Financial Times on the list include Ireland, Labuan, Belgium and the Netherlands. Under the new legislation, from 1 July 2006, investors from these countries will have to pay tax on profits up to 27.5% of the income earned in South Korea, including interest, dividends and capital gains.

This is due to the desire of South Korea put an end to active tax evasion by foreign companies. In November 2005, the National Tax Service has expressed concern about the connection «Labuan offshore funds to the investigation». Then in January Service announced that more than 100 companies are listed companies, which will be investigated for violations of local tax laws.

According to the Tax Service, some companies greatly reduced their tax obligations, despite the «huge profits». This move aroused fears among many analysts because it could have negative consequences for the economy of South Korea. Foreign investors may take away investment from the country to put them in a more tolerant countries in the Asia-Pacific region.