National Tax Service Believes YG Entertainment Evaded Taxes From Overseas Concerts
The National Tax Service (NTS) is focusing its efforts on investigating YG Entertainment, believing that it is highly likely the company evaded paying taxes by under reporting profits from its artists’ overseas concerts and performances, as well as hiding property and assets overseas.
According to the authorities, on March 20, the Seoul Regional Tax Office Team 4 took nearly 100 employees to collect a wide range of documents and data from YG Entertainment, Yang Hyun Suk, and the other corporations he owns.
Earlier in the day, the Seoul Regional Tax Office was able to secure financial details from YG Entertainment’s overseas concerts and performances from the past 5 years from the International Trade Research Bureau. The data collected from March 20 will be compared to the information obtained from the Research Bureau, for any discrepancies.
Industry insiders believe it was hard for YG Entertainment to report the detailed earnings for overseas performances by artists such as BIGBANG, PSY, and 2NE1. They believe YG was not able to follow the local tax laws.
The NTS can understand only up to a certain point the amount money earned from overseas royalties and copyrights through the Korean Financial Intelligence Unit (FIU). Due to contract regulations, details of profits from performances in Japan, China, and Southeast Asia may not be fully revealed.
The NTS is also checking whether YG Entertainment and Yang Hyun Suk have held back profits from overseas by “parking” them, or intentionally concealing them. They are looking to see if YG has any hidden high-value assets, such as paintings or buildings.
They are also investigating the possibility of Yang Hyun Suk evading taxes on his clubs in South Korea. Many clubs like Love Signal were registered as general dining restaurants, which means they are required to pay a 10% tax. However, adult entertainment establishments, which includes clubs like Love Signal, are required to pay 23% tax.
Finally, they are looking into Yang Hyun Suk and Yang Min Suk’s personal tax evasion, as it has been discovered the two have sold off a considerable amount of property overseas, and are investigating to see if their taxes were filed properly.
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