Korean stars' corporate structures under tax scrutiny; industry group calls for clearer guidelines and recognition of their business roles.
February/13/2026 12:11Related Groups & Members
Recently, amid allegations of tax avoidance surrounding the establishment of personal corporations by K-pop stars like ASTRO's Cha Eun-woo and Kim Seon-ho, a professional organization in the entertainment industry pointed out issues with the current system and called for improvements. The Korea Management Association (KMA) issued a statement on the 12th, expressing regret over the tax authorities' approach of uniformly viewing personal corporations of entertainers as means of tax evasion. KMA diagnosed that 'K-content has emerged as a leading player in the global market, and the industrial structure has rapidly changed.' They analyzed that the Korean entertainment industry, which has grown based on the one-stop management system of the 1990s, has expanded globally, and some artists' revenue structures have effectively reached the stage of 'corporatization.' They explained that establishing personal corporations for artists to manage their careers, intellectual property rights (IP), and long-term brand value is a natural flow accompanying industrial development. However, the current tax administration views these personal corporations as 'conduits (paper companies)' to avoid progressive income tax rates, leading to repeated post-collection actions. KMA pointed out that 'this is an example of the system and administration not keeping up with the changed industrial structure.' They emphasized that personal corporations are not merely 'shells' for tax management but engage in substantial management activities such as mental care for artists, long-term career management, IP development, content planning, and bearing liabilities from exclusive contracts. KMA analyzed that the repeated issues of post-collection stem from a 'lack of standards' rather than 'malice.' They argued that the reason why the National Tax Service's actions are repeatedly overturned in tax trials and administrative lawsuits is due to the absence of clear and predictable tax standards. In response, KMA suggested that the government establish clear tax guidelines recognizing the industrial substance of personal corporations, create predictable tax standards reflecting the substantial roles and risks of corporations, improve systems to promote transparent operations rather than focusing on enforcement and collection, and provide positive administrative interpretations that do not undermine the global competitiveness of the K-culture industry. Finally, KMA emphasized that 'K-culture is the future industry of the Republic of Korea and a national brand,' stating that if we judge the structure that has driven its growth solely through the frame of tax evasion, we will stop our own growth engine. KMA earnestly appeals to the public and the government to recognize the realities of the industry and improve the system.
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