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The Korean National Tax Service will investigate celebrities who are evading taxes using loopholes in the system.
To avoid taxes, it is reported that celebrities will register their buildings under the name of a real estate corporation that they established or will find a gap in the system by listing the property as gifts for children. This practice has been criticized as the public records of building owners can easily be found. Celebrities like Lee Byung Hun, Kwon Sang Woo, Han Hyo Joo, Kim Tae Hee, and more have not bought buildings in their own name but under corporations. By purchasing real estate as a corporation, celebrities can reduce acquisition, capital gains, and rental income tax, nor pay comprehensive real estate taxes paid by private owners. Although this behavior is not illegal, it is clear that these methods are using loopholes to avoid paying taxes.
According to the MBC ‘PD Note’, the addresses of established real estate corporations would be listed in non-Seoul regions to receive further tax cuts. Lee Byung Hyun purchased a building worth KRW 26 billion ($ 21.2 million) in Yeongeungpo, Seoul, but bought the building under the name of a family corporation listed in Gyeongido. Kim Tae Hee purchased a KRW 13.2 billion ($ 10.7 million) building in Gangnam, Seoul, but his corporation was also listed in Gyeongido. In the case of Kim Tae Hee, she was able to save KRW 920 million (USD750,000) in taxes due to this method.
The National Tax Service has launched investigations into 27 of these types of corporations, but thousands are said to be left to review. An organization official has stated that this issue is not a blind spot, but rather an area that must be strictly managed.
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