Tax Investigations to Intensify in the Korean Entertainment Industry

Kang Ho Dong and Kim Ah Joong were recently accused of under-paying their taxes. However, this is only the beginning. More and more attention is being drawn to other entertainers and their taxes.

While other high-income professionals and business owners have been intensely investigated by the NTS (National Tax Service, the Korean IRS), the entertainment industry has been outside of their radar. Management agencies of various celebrities have been able to spread out their income over many years and this has caused legal confusion for the NTS.

Big agencies and popular entertainers with high incomes used professionals to handle their tax returns. This option made these procedures gradually transparent. However, occasional tax evasions are bound to occur with voluntary tax returns. Payments from broadcasters can be easily traced, but other external payments (payments for CF etc.) are much harder to trace.

This is why tax evasions in the entertainment industry occurred often in the past. Some of the famous entertainers and agencies have even been labeled as “tax evaders” and are high up on the NTS lists. The two topstars “K” and “S” were accused of tax evasion. However, they were never convicted for it. Other big agencies were also accused of tax evasion. They did not mention their full incomes and invested large amounts of money in cultural activities.

The case of Kang Ho Dong has brought up some confusion and is still a case of doubt for the NTS. However, the chances are high that other cases of celebrities’ tax evasions will be exposed soon. With the “Hallyu” craze, celebrities will earn more and more and this is the reason why the NTS will focus more intensely on the entertainment industry.

The so-called “tax-storm” is on its way to the Korean entertainment industry. Tension among the celebrities and its agencies is building. However, one tax official mentioned “The case of Kang Ho Dong may intensify similar investigations, but the expansion of investigations is not planned.”