Government Calling for "Eradication of Private Education"... National Tax Service and Fair Trade Commission Pressure Large Entrance Exam Companies

Tax Audits Including Megastudy and Fair Trade Commission Investigations Scheduled
Entrance Exam Industry Claims "Showcase Tax Audits"

The crackdown on private education stemming from President Yoon Suk-yeol's directive to exclude 'killer questions' from the CSAT has led to tax investigations of major private education companies. The Fair Trade Commission and the Ministry of Education are also set to examine the actual conditions of the government-identified 'private education cartel,' signaling the start of comprehensive government pressure on the private education sector.

On the morning of the 28th, the National Tax Service (NTS) launched a special tax investigation by dispatching the Seoul NTS Investigation Division 4 to the Megastudy headquarters in Seocho-gu, Seoul, to secure accounting data.

Following Megastudy, the NTS also began special tax investigations into major entrance exam academies such as Sidae Injae, Jongno Academy, and Uway. There are predictions that the tax investigations may expand to include some 'top instructors.'

With only three days left until the 2021 College Scholastic Ability Test, concerns among test-takers are growing as the spread of COVID-19 shows no signs of slowing down. Tension is palpable in the academy district of Daechi-dong, Gangnam-gu, Seoul on this day. Photo by Moon Honam munonam@

Megastudy, the number one company in online and offline private education, and Sidae Injae, which has rapidly expanded in recent years, have long been considered top priorities for tax investigations. With the sudden launch of special tax investigations into these representative companies in the private education market, other entrance exam academies are also on high alert.

The Fair Trade Commission will also inspect unfair advertising practices of major large academies. Starting next month, the FTC plans to thoroughly investigate potential legal violations related to entrance exam academy advertisements. Additionally, after reviewing reports submitted to the Ministry of Education, on-site investigations will be conducted on companies suspected of legal violations. This will be the first on-site investigation of entrance exam academies in 10 years since the Park Geun-hye administration in 2013.

The Ministry of Education has formed an intergovernmental response council with the Fair Trade Commission and the National Police Agency and has been operating a Private Education Cartel and Corruption Reporting Center for two weeks since the 22nd, intensifying pressure on the private education market.

From 2 p.m. on the 22nd to 3 p.m. on the 28th, a total of 119 reports were received at the Private Education Cartel and Corruption Reporting Center. By type, there were ▲20 cases suspected of collusion between private education companies and the CSAT question-setting system ▲10 cases of forced purchases such as bundled textbooks ▲11 cases of overcharging for tuition fees ▲23 cases of false or exaggerated advertising ▲and 74 other cases. Among these, 32 reports were related to large entrance exam academies.

The Ministry of Education also plans to conduct joint on-site inspections of large academies together with the Seoul Metropolitan Office of Education and others.

Amid such high-intensity government pressure including tax investigations, the entrance exam industry is in a state of extreme tension, and examinees preparing for their last summer vacation academy courses ahead of the November CSAT are also unsettled. Within the entrance exam industry, there are complaints that 'killer question' specialized academies targeting top-tier examinees are usually operated on a relatively small scale, and that the tax investigations are being conducted as a 'showcase' targeting large-scale private education companies focused on online education or large lectures, unrelated to high-priced private tutoring.

A representative of a large entrance exam academy in Daechi-dong, Gangnam-gu, Seoul, said, "Regular lectures and summer vacation special lectures for examinees will proceed as planned, but we feel burdened about holding entrance exam briefings related to early admissions and the CSAT." Another industry insider said, "Because the purpose and scope of the tax investigations have not been clearly communicated, the entire private education sector is on edge."

This content was produced with the assistance of AI translation services.