South Korean actors Yoo Yeon-seok and Lee Joon-gi hit with taxes exceeding US$615,000
Both actors are among the celebrities who were investigated by South Korea's National Tax Service over issues surrounding their tax payments.
South Korean actors Yoo Yeon-seok (left) and Lee Joon-gi (right) are some of the celebrities who are now facing high taxes imposed by the authorities. (Photos: Instagram/yoo_yeonseok, actor_jg)
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In recent weeks, multiple South Korean celebrities have been told by the authorities to pay heftier taxes – following investigations into their tax payments. These include Flower Of Evil star Lee Joon-gi, Hospital Playlist's Yoo Yeon-seok and former Miss Korea Honey Lee.
Lee Joon-gi, 42, was imposed a reassessed tax payment of 900 million won (US$616,000) following an audit by South Korea's National Tax Service.
On Wednesday (Mar 19), Lee's agency Namoo Actors released a statement informing that the 900 million won has since been "paid in full".
They also explained the discrepancy.
"This taxation issue arose from differing interpretations and applications of tax law between our tax representative and the tax authorities. It was a decision completely different from past taxation practices, and there are conflicting opinions regarding its validity – not only among tax experts but also in academia."
Although he is signed to Namoo Actors, Lee Joon-gi established a one-man agency called JG Entertainment in 2014. Lee's appearance fees for his projects were then paid to JG Entertainment and reported as corporate revenue. As such, these appearance fees were subjected to South Korea's corporate tax rates and not the country's personal income tax rates.
In South Korea, the highest corporate tax rate is 24 per cent while the highest personal income tax rate is 45 per cent.
Namoo Actors added: "The key issue during the investigation was whether the transaction of tax invoices between us and JG Entertainment was legitimate, and whether the income should be regarded as corporate tax for JG Entertainment or personal income tax for Lee Joon-gi. Other than the difference in perspective, no other matters related to tax evasion or tax avoidance were pointed out during the investigation.”
Despite having already paid the 900 million won in full, Lee has filed an appeal.
In a statement, Lee's representatives said: "We fully respect the decision of the tax authorities. However, we have filed an appeal to the Tax Tribunal as this matter was never pointed out during the previous regular tax audits in 2015 and 2019. We are aware that there is no existing precedent regarding the practice of managing income and assets through a personal corporation."
Similarly, Yoo Yeon-seok has been hit with an additional tax of seven billion won (US$4.79 million) – reportedly the largest known sum imposed on a celebrity in South Korea.
Like Lee Joon-gi, Yoo also established a one-man agency – called Forever Entertainment – to receive revenue from his appearances in projects. However, Yoo also developed YouTube content as an extension of his entertainment activities and operated businesses such as restaurants.
On Mar 14, Yoo's agency – King Kong By Starship – said in a statement that it would be challenging the tax amount.
"We plan to actively present our case following proper legal procedures concerning the dispute over the interpretation and application of the law. This issue pertains to the income generated over the past five years by a corporation operated by Yoo Yeon-seok for the purpose of developing and producing YouTube content, as well as running supplementary businesses and dining establishments as an extension of his entertainment activities.
"The tax authorities have interpreted this income as subject to personal income tax instead of corporate tax, resulting in the imposition of personal income tax on revenue that had previously been fully reported by our tax representative as corporate income."
