A current accountant has weighed in on actor Kim Seon Ho’s tax evasion allegations.
Lawyer and accountant Kim Myung Kyu posted on his social media account on February 2, “Before the issue of Cha Eunwoo’s ₩20.0 billion KRW (about $13.8 million USD) tax surcharge has even settled, there’s now suspicion regarding Kim Seon Ho from the same agency. Since this again involves a one-person corporation/family corporation, a warning about such corporations will likely be issued in the entertainment industry for the time being.”
Kim summarized the situation as follows: “1) Setting up a corporation at home (executives are parents). 2) Using the corporate card for living expenses (alleged). 3) Paying false salaries to parents (alleged). The agency’s explanation seems somewhat risky. They said, ‘It’s not tax evasion; it was created to do theatrical activities, but there have been no business activities so it is now closed.’ As a lawyer and accountant, I think this explanation might be a self-defeating move.”
Kim explained, “Why is it self-defeating? Why is saying there was no business dangerous? If there were no business activities, then there should be no business expenses. But if corporate cards were used and salaries paid to parents during a year when the business was inactive, that money becomes ‘non-business-related expenses (advance payments)’ under tax law. This opens the door to interpreting the misuse of corporate funds as “embezzlement” or ‘breach of trust,’ legally speaking, which the agency is essentially inviting themselves.”
He added, “Regarding ‘bonus treatment’ due to advance payments: it doesn’t end at ‘You borrowed money, so repay it.’ If money was spent without actual business activities, the tax authorities will consider it as the representative (like Kim Seon Ho) receiving a bonus, imposing ‘bonus treatment.’”
Kim further stated, “The paradox of closure: closing a company doesn’t mean the National Tax Service’s documents and records disappear. In fact, the closure is an ideal opportunity for tax authorities to thoroughly review money flows. Saying, ‘We’re closing because no work was done,’ can actually be like sending an invitation for inspection.”
He continued, “In the end, the key is substance. Did they really plan theatrical productions? (documents like plans or meeting records) Did the parents really work? (work logs, etc.) Proper explanations on these points are necessary. If they fail to clarify properly, this explanation could escalate ‘tax evasion suspicion’ into ’embezzlement/breach of trust controversy’—the question being why company money was used if no business was conducted. I worry that the agency is making a complacent judgment, thinking, ‘Who would think this far?’”
Meanwhile, allegations emerged that Kim Seon Ho operated a corporation separately from his agency Fantagio for tax evasion purposes. In response, Fantagio stated, “Currently, Kim Seon Ho is active under an exclusive contract with Fantagio and under his personal name, and we are faithfully complying with all legal and tax procedures concerning his current contract and activities.”
Fantagio emphasized, “We firmly state that there are no issues regarding Kim Seon Ho’s contract or activities with Fantagio.”
They added, “The one-person corporation was originally established for theater production and related activities, and was absolutely not created with the intent of deliberate tax avoidance or evasion. However, since transferring to Fantagio, actual business activities have not been conducted for over a year, and closure procedures are currently underway following relevant laws and processes.“