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The National Tax Service (NTS) is investigating the offshore tax evasion of YG Entertainment’s overseas performances

The National Tax Service is focusing its investigation on YG Entertainment, believing that it is highly likely that YG Entertainment evaded overseas taxes by underreporting profits from its artists’ overseas performances and siphoning off assets overseas.

YG Entertainment CEO Yang Hyun-suk (left) speaks to JYP CEO Park Jin-young at a press conference for SBS survival audition “K-pop Star 3” held on Oct. 8th, 2013, at the Brillier in Mokdong, Yangcheon-gu, Seoul.

According to the authorities on the 21st, the Seoul Regional Tax Office injected about 100 workers from four surveyed countries on the previous day to secure a wide range of data from Yang Hyun-suk – the CEO of YG Entertainment, other companies he owns, and YG Entertainment.

Earlier in the day, the Seoul Regional Tax Office secured details of YG Enters’ overseas performances over the past five years through the International Trade Research Bureau. It is heard that the financial data obtained on the 20th is being checked against the exact amount of financial data based on the performance information collected and estimated revenue.

Officials in the performing industry believe it would have been difficult to report all the details of earnings from overseas by artists currently affiliated with YG Ent. or previously belong to the agency, such as Big Bang, PSY, 2NE1, according to local tax laws. The National Tax Service (NTS) can only grasp the artists’ overseas publication rights and copyright fees to some extent through FIU. However, it is possible that overseas performance profits detail in Japan, Southeast Asia and China wasn’t fully reported by mutual agreement of contractors.

The NTS is also checking whether Yang Hyun-suk and YG Ent. have the so-called “parking” (intentionally hiding) his property or any related markets or assets without bringing in profits from overseas. They are looking to see if they have any unreported high-value assets such as hidden villas and art pieces overseas.

In addition, the National Tax Service is also investigating charges of evading the law in South Korea, including the Seogyo-dong club “Love Signal,” which along with some other facilities are reportedly owned by Yang. The National Tax Service believes that although the club is registered as a general restaurant, it is effectively run as an entertainment outlet and is suspected of evading individual consumption taxes. Yang and YG Ent. are using restaurant business like the “Samgeori Pocha” to hide the entertainment businesses facilities which sell alcoholic beverages in commercial districts near Hongik University.

Kang Min-soo, planning and coordination officer of the National Tax Service, explains how to manage the country’s tax administration in 2019 in connection with the meeting of the heads of the National Tax Service in the press room of the Government Sejong 2 Government Complex.

The National Tax Service is also weighing on the possibility of Yang’s personal tax evasion. Yang Hyun-suk and his brother, Yang Min-seok, are being investigated to see if there are any tax sources that have not been reported while signing contracts with overseas investors regarding securities or ownership interests. “It has been revealed that they have sold a considerable amount of securities overseas, and we are investigating whether the tax returns regarding them have been made correctly,” an official said to the media.

The National Tax Service (NTS) has deployed an unusually large number of workers to the probe because the scope of the probe is too wide. “Since the tax office has no investigative authority, unlike the prosecution, it cannot deposit financial information without the National Tax Service (NTS) finding out the obvious reason for the investigation,” said a source at the authorities. “We have already secured a considerable amount of data to prove the allegations beforehand.

Soures: Nate

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