The joint industrial complex in the North Korean border city of Gaeseong is the only pipeline linking the two Koreas due to their strained relations. The possible tinderbox for renewed inter-Korean relations is facing the threat of being put out because North Korea has unilaterally slapped heavy taxes on South Korean firms operating there.
North Korea revised tax regulations in August for South Korean businesses operating in Kaesong to impose hefty fines on companies if caught dodging taxes. According to the original regulations that were agreed in 2003 when both Koreas were working to open the complex, Pyongyang is required to negotiate with Seoul any changes to the relevant tax laws, but the North made the revisions arbitrarily without consulting the South.
The North has threatened to either block their exports or evict them from the complex if they fail to pay up. North Korea must be dreaming if it thinks foreign companies will simply submit to such an arbitrary regime, let alone pour fresh investment into the country.
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