Published : 2013-03-17 15:00
Updated : 2013-03-17 15:00
SEOUL -- North Korea has legislated to levy taxes on foreigners doing business in the tax-free Mount Geumgang tourist zone, a South Korean government report said Sunday, amid concerns that taxes could trigger dispute after a resumption of the long-stalled inter-Korean tourism project there.
The newly-inaugurated Park Geun-hye government has expressed willingness to resume inter-Korean ties, which plummeted to the lowest level in decades under the previous Lee Myung-bak government.
North Korea adopted the tax rules for the Mount Geumgang special tourism zone with a decree by the Standing Committee of the Supreme People's Assembly in June last year, according to the "DPRK book of laws in the external economic field" obtained exclusively by Yonhap News Agency. DPRK refers to the North's official name, the Democratic People's Republic of Korea.
South Korea's Hyundai Asan Corp., which initially developed the Mount Geumgang resort, first operated a cruise ship service for South Korean tourists to the North in 1998. The tours, however, were halted in 2008 after a female South Korean tourist was shot to death at the resort by a North Korean guard.
In May 2011, Pyongyang made a special law governing the Mount Geumgang region, and confiscated assets owned by South Korean companies. The North has since made an effort to attract tourists from China and other countries.
The book speculated that the rules will be applied to "firms and individuals doing economic trade or making money" in the enclave, apparently referring to foreigners, South Koreans and overseas Koreans as well as their invested companies.
The tax rules had content on taxes on corporate and individual income, property, inheritance, transaction, business as well as local taxes.
The rules constitute a lower level law under the special law and the rules thus can negatively affect future investment by South Korean firms and individuals on the tourism project, experts say.
Pyongyang previously charged US$50 per South Korean tourist visiting the area without separate rules for levying taxes.
"If North Korea applies the new tax rules without recognizing existing agreements with South Korea as an exception, that can be an issue in the negotiations between the two Koreas to resume the Mount Geumgang tour," said Cho Bong-hyun, an analyst at the IBK Economic Research Institute. (Yonhap News)