[Update at the bottom]
The Korean National Tax Service is going on a rampant investigation of tax evasion fraud in the entertainment industry.
This year, a whopping total of 93 people are under investigation for suspected offshore tax evasion.
Right now, the biggest target of the National Tax Service is an unnamed Korean entertainment agency, who funneled approximately 7 billion won ($6.2 million) through a Hong Kong paper company instead of having the money delivered straight to South Korea.
How that works exactly, we’re not entirely sure, but according to Naver’s report, this unnamed company charged the paper company for 9 billion won worth of artificial services, which is 2 billion won more than the amount they’re trying to funnel.
Investigators believe that this entertainment company is trying to report an artificial loss in order to mask their tax evasion.
Apparently forming paper companies is a common way for businesses to avoid taxes, and it’s starting to leave footprints.
Companies and people trying to avoid taxes are coming up with different tactics to avoid being investigated, like funneling the money through stocks or reporting artificial losses of their own.
All of this sounds super familiar, kind of like how SM Entertainment was found to be leaking 10 billion won to founder Lee Soo Man’s personal agency.
Pay your taxes people.
[Update]: The unnamed entertainment company has been ordered to pay the 9 billion won back to the South Korean government, and has also been fined an additional 2 billion won.
[Update 2]: Several celebrities have also been fined due to tax evasion.