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S. Korean Firms at Kaesong Complex to Pay New Tax

FILE - North Korean workers assemble Western-style suits at the South Korean-run ShinWon Corp. garment factory inside the Kaesong Industrial Complex in Kaesong, North Korea.

South Korean firms at the Kaesong Industrial Complex will begin paying a land-use tax to North Korea this year, South Korea’s Unification Ministry said Wednesday.

Under an inter-Korean deal regulating the management of the complex, the South Korean firms were exempt from the tax for the first 10 years after the establishment of the industrial park in 2004.

Park Soo-jin, deputy spokeswoman for the ministry, told reporters that the government would begin negotiations with North Korea on the payment of the tax.

The inter-Korean agreement calls for the amount of the tax to be decided through mutual consent, but Park said nothing had been decided yet.

“North Korea has indicated its intent to discuss the issue orally last November, but there has been no request or notification from the North Korean side, thus there has been no discussion between the two sides,” Park said during a press briefing.

North Korea has reportedly suggested that South Korean firms pay $3.50 per 3.3 square meters of land. It is not known whether Seoul will accept the offer. Some owners of the firms have raised concerns that a possible disagreement over the payment could protract the negotiations.

Earlier this year, the two Koreas collided with each other over the monthly minimum wage for North Korean workers at the complex. They ended the standoff after several months of tension that jeopardized the operation of the firms.

Meanwhile, North Korea banned two South Korean officials from entering the complex Wednesday. It was not clear why the communist country blocked their entry to the industrial park.

One of the officials denied entry is the vice chairman of South Korea’s committee responsible for managing the inter-Korean complex, who has been involved in negotiations over wages and fees, according to South Korea’s Unification Ministry.

A Unification Ministry official expressed regret over the North Korean move, saying it was a clear violation of an inter-Korean agreement for the complex.

About 50,000 North Koreans are working at factories run by about 120 South Korean companies in the Kaesong industrial zone.

Jee Abbey Lee contributed to this report, which was produced in collaboration with the VOA Korean service.