National Tax Service Conducts Special Tax Audit on Kakao Affiliates

Kakao Entertainment and Kakao Games Targeted, Investigation by Division 4 Underway

[Asia Economy Reporter Kwangho Lee] The National Tax Service (NTS) has reportedly launched an irregular special tax audit targeting Kakao affiliates.

According to industry sources on the 24th, the NTS is currently conducting special tax audits on several Kakao affiliates, including Kakao Entertainment and Kakao Games. Since this is a special tax audit rather than a regular one, it is said to be handled by the 4th Investigation Division of the Seoul Regional Tax Office.

The NTS is expected to focus on verifying whether Kakao engaged in tax evasion during its 'octopus-like' expansion of affiliates.

In the case of Kakao Entertainment, it is currently undergoing a tax audit following an investigation by the Fair Trade Commission (FTC).

The FTC recently conducted an on-site investigation into allegations that Kakao Entertainment, while managing the Facebook page 'Idol Yeonguso' (Idol Research Institute) on consignment, deliberately defamed competitors' idols or promoted its own idols.

The FTC also launched an investigation last year into allegations that Kakao Entertainment abused its dominant position in transactions during a web novel contest by unfairly acquiring copyrights to participants' submissions.