Tax Audit on Entrance Exam Academies, Cracking Down on Private Education?..."51.2 Billion KRW Additional Payments in the Last 6 Years"

132 Irregular Tax Audits Over 6 Years... 51.2 Billion Won Recovered
Ruling and Opposition Clash Over "Routine Investigation" vs. "Political Pressure"

Recently, tax authorities conducted tax investigations targeting private academies, revealing that over the past six years, academy operators have paid more than 50 billion won in additional taxes following tax audits by the National Tax Service (NTS). This indicates that tax investigations into private academies are not unusual.

According to data submitted by the NTS to Park Dae-chul, a member of the National Assembly's Planning and Finance Committee from the People Power Party, there were a total of 132 irregular tax audits targeting academy operators from 2017 to 2022.

Irregular tax audits differ from regular audits in that they are conducted based on reports or tips, usually when there are suspicions of tax evasion.

By year, the highest number of irregular tax audits targeting academy operators was in 2019 with 33 cases, followed by 2020 (32 cases), 2017 (22 cases), and 2021 (19 cases). The total amount of additional taxes collected from these audits over six years was 51.2 billion won, with 2020 seeing the highest amount at 18.9 billion won.

Complaints related to irregularities in private education also showed an increasing trend. Last year, the NTS’s Private Academy Fee Irregularities Reporting Center received a total of 282 complaints (247 newly received and 35 carried over), an 11.5% increase from the previous year’s 253 complaints.

These statistics show that although recent tax investigations into academies have sometimes been perceived as coincidental or sudden, they are not unprecedented.

Earlier, on June 28, the NTS launched irregular tax audits targeting well-known Seoul academies such as Megastudy, Jongno Academy, and Sidae Injae, sparking controversy. It was also reported that a tax audit on the famous instructor Hyun Woo-jin was conducted without prior notice.

A private academy district in Seoul [Image source=Yonhap News]

Academy officials believe that this round of tax investigations stemmed from President Yoon Seok-yeol’s so-called ‘private education cartel’ issue. On June 15, President Yoon asked Lee Ju-ho, Deputy Prime Minister for Social Affairs and Minister of Education, “Are the education authorities and private education on the same side?” The tax investigations began after this, and other government agencies have also taken action. The Ministry of Education received concentrated reports of unfair advertising through the ‘Private Education Cartel and Irregularities Reporting Center’ until the 6th, and the Fair Trade Commission plans to issue corrective orders and impose fines based on these reports.

The opposition party criticized the situation, saying, “Isn’t the NTS’s tax investigation following President Yoon’s orders just trying to curry favor with the administration?”

At the Planning and Finance Committee plenary session on the 5th, the Democratic Party strongly criticized, saying, “This is a picture of the NTS cracking down on private education companies and ‘star instructors’ at the president’s impulsive remark,” and asked, “Is the NTS the president’s commissioned contractor?” Democratic Party lawmaker Seo Young-kyo raised her voice, saying, “Is it acceptable for the NTS to suddenly start an investigation without prior notice? Doesn’t this mean the NTS commissioner is unqualified?”

On the other hand, People Power Party lawmakers defended the government, saying, “Private academies have always been a key focus for potential tax evasion,” and “The number of irregularity reports and tax collections has been increasing every year over the past five years.” Lawmaker Park Dae-chul countered, “Tax audits on high-fee academy operators have been conducted annually. Why is only this year’s investigation called a ‘political investigation’?”

Meanwhile, Kim Chang-gi, commissioner of the NTS, responded to opposition inquiries about whether there was any instruction from the presidential office regarding the tax investigations by stating, “Tax verification of private education companies is conducted year-round on an ongoing basis.”

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