Actor Kim Seon-ho has been embroiled in tax evasion allegations following Cha Eun-woo. Kim Seon-ho denies the tax evasion allegations, but some have viewed his explanatory statement as a "self-inflicted mistake." What is the key issue in this allegation and the most important point Kim Seon-ho's side must prove?
Recently, within the entertainment industry some have raised suspicions that Kim Seon-ho created a family corporation separate from his current agency Fantagio and that there are signs of substantial tax evasion. According to reports, Kim Seon-ho established and operates a separate performance planning company registered at his residence in Yongsan-gu, Seoul. Kim Seon-ho is the chief executive officer of this corporation, and the internal directors are Kim Seon-ho's parents.
Meanwhile, it was reported that Kim Seon-ho used the corporate bank account to pay his parents monthly salaries ranging from several hundred thousand won to several million won, and that the parents who received salaries from this corporation were observed transferring the salaries back to Kim Seon-ho each month. In addition, Kim Seon-ho's parents used the corporation's credit card to pay for living and entertainment expenses, the father covered cigarette costs and payments at singing bars with the corporate card, and the vehicle they use is also registered under the corporation's name. Critics say this appears intended to increase company expenses to treat them as deductible costs and thereby reduce corporate tax, and that private use of the corporate card raises allegations of breach of trust and embezzlement.
In response to the controversy, Fantagio said, "Currently, Kim Seon-ho is under an exclusive contract with Fantagio in his personal name and is carrying out activities, and all legal and tax procedures related to the current contractual relationship and activities are being faithfully observed. There are no problems regarding the contract and activities between Kim Seon-ho and Fantagio," and added, "The former single-person corporation was established for theater production and theater-related activities and was never intended for deliberate tax avoidance or evasion. After moving to Fantagio, actual business activities have not been carried out for about a year, and we are currently undergoing closure procedures in accordance with relevant laws and procedures."
In this regard, lawyer and accountant Kim Myung-gyu said on his social media on the 2nd that he viewed the statement as a "self-inflicted mistake." The contentious part is the phrase "it was established for theater production and theater-related activities, and business activities have not been carried out for about a year."
If, as the official statement claims, there were no business activities but the corporate card was used and salaries were paid to the parents as reported, those expenses would be classified under tax law as "nonbusiness-related expenses (provisional payments)." Legally, this could be interpreted as "embezzlement" or "breach of trust," and critics say the agency has effectively opened the door to that possibility. They also noted that the claim that closure procedures are underway could instead provide tax authorities with a good reason to launch a more thorough tax investigation.
Ultimately, the key issue in this allegation is whether the single-person corporation actually performed business activities.
It must be demonstrated whether, during the period the corporate card was used, the company actually carried out theater production and theater-related business activities, and whether Kim Seon-ho's parents performed work. Any money paid without proof of substantive business operations is likely to be regarded as bonuses taken by the representative (such as Kim Seon-ho) and could lead to an "extraordinary salary assessment" that triggers higher income tax. If this is not properly explained, the agency's claim that "business activities have not been carried out for about a year" could fuel the 'tax evasion allegation' and escalate it into an 'embezzlement/breach of trust controversy,' experts say.
Fantagio said, "We will continue to comply with relevant laws and procedures in all activities and will do our best to ensure the actor's activities can continue without unnecessary misunderstanding." Attention is focusing on whether the additional allegations raised can also be clearly resolved.
[Photo] OSEN DB
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