'Offshore Tax Evasion' Jang Geun-seok's Mother's Company Loses Lawsuit to Cancel 300 Million KRW Corporate Tax Imposition

[Asia Economy Reporter Kim Daehyun] An entertainment agency operated by actor Jang Geun-suk's mother filed an administrative lawsuit against the tax authorities, demanding the cancellation of additional taxes amounting to over 300 million KRW imposed after being caught for offshore tax evasion, but lost in the first trial.

According to the legal community on the 20th, the Seoul Administrative Court Administrative Division 5 (Chief Judge Jeong Sang-gyu) ruled against the plaintiff in the lawsuit filed by entertainment agency A against the Gangnam Tax Office Chief and the Seoul Regional Tax Office Chief, seeking cancellation of corporate tax imposition and other dispositions.

Earlier, the Japanese National Tax Agency provided information to the Korean National Tax Service suggesting that A had omitted tax-related declarations. As a result of a corporate tax audit conducted by the tax authorities, it was found that A's representative, Mr. B, transferred approximately 5.38 billion KRW of actor Jang Geun-suk's 2012 earnings from activities in Japan to his own overseas account, thereby omitting it.

After the tax audit began, A voluntarily paid the omitted corporate tax, but the tax authorities notified them to pay an additional 32 million KRW including penalties for false or underreporting. In response, A argued, "There was no intention to evade corporate tax, and it was merely an underreporting of the tax base," and filed an administrative lawsuit.

The court judged that the tax authorities' disposition was appropriate. It found that A received income through Mr. B's overseas account, which was difficult for the tax office to trace, and failed to report the related corporate tax and value-added tax, constituting tax avoidance.

The court stated, "The tax authorities did not know of the existence of the overseas account until they received overseas information exchange data from the Japanese National Tax Agency under the Korea-Japan tax treaty, and A only amended and paid the corporate tax after the tax audit began," adding, "The act of omitting corporate tax declaration constitutes fraudulent behavior that makes tax imposition and collection impossible or significantly difficult."

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