Key Summary:
Amid ongoing debates surrounding the taxation of one-person entertainment agencies in Korea, there are calls to reference international examples from countries like the United States and Japan to develop solutions suitable for the Korean entertainment industry. The industry structure in Korea involves management companies overseeing an artist’s entire career trajectory, which differs from the models in the U.S. and Japan. The U.S. model, where entertainers may use “Loan-out Corporations” to manage contracts and income, is suggested as a reference for domestic policy adjustments.
There are mixed reactions regarding the tax investigations into one-person agencies. Some industry representatives express concerns over the fairness and implications of such investigations on reputation and legal standings, advocating for clarity in tax regulations before proceeding with extensive tax audits. In contrast, tax authorities emphasize these are standard procedures adhering to tax laws, highlighting the importance of addressing income reporting discrepancies where personal service corporations may misallocate income to evade higher tax rates. The consensus calls for a balanced approach considering the unique aspects of the entertainment industry.
This issue was discussed in a forum attended by various stakeholders, including lawmakers, the Ministry of Culture, Sports and Tourism, the National Tax Service, and the entertainment industry.