S Korea''s underground economy estimated at 17 pct of GDP

Seoul, Feb 11 (Yonhap) The size of the so-calledunderground economy in South Korea has been shrinking steadilysince the early 1990s due to increased transparency offinancial transactions, a report said today.

According to the report by the Korea Institute of PublicFinance, the size of the untaxed portion of the South Koreaneconomy was estimated at 17.1 per cent of the gross domesticproduct (GDP) in 2008, lower than 28.7 per cent in the 1990sand 23.7 per cent in the early 2000s.

The report said a series of measures to boosttransparency of financial transactions, including a scheme forreal name-based financial transactions, helped to scale backthe size of the underground economy in the country.

The institute estimated that business entities in thecountry hid up to 29 trillion won (USD25.9 billion) worth ofrevenues in 2008, equal to 3.1 per cent of the country''soverall economic size.

"The government should redouble efforts to boosttransparency by encouraging the use of credit cards," thereport said.

Also, more use of cash receipts will lead to animprovement in tax sources, which will in turn increaseoverall tax income, it added. YONHAP