Interest in VAT Taxation Rules for Webtoons
"Too Many Regulations" VS "Should Have Examined More Closely"
[Asia Economy Reporter Bang Je-il] Popular webtoon artist Yaongi (real name Kim Nayoung) has recently come under tax investigation by the National Tax Service, bringing renewed attention to the value-added tax (VAT) regulations on webtoons.
According to a report by Yonhap News on the 21st, Yaongi recently stated on her social networking service (SNS), "There is a legal dispute regarding the interpretation of VAT related to the publishing and webtoon industries, and I am actively clarifying the matter with the help of a professional accountant."
In this regard, voices from the comics industry say that the VAT taxation, exemption conditions, and exceptions for the emerging webtoon industry are too numerous, making it difficult for artists to fully understand them all. The most confusing aspect for cartoonists is that even when serializing the same work, the taxability differs between individuals and corporations.
According to Article 42 of the Enforcement Decree of the Value-Added Tax Act, if an individual business operator supplies cartoon and illustration services independently without employing workers, VAT is exempted; however, if a corporation provides the service, it is subject to taxation.
In other words, when an individual artist serializes a webtoon alone on a platform, there was no need to issue a tax invoice, but if they later hire assistants and establish a corporation to serialize the webtoon, failing to issue a tax invoice constitutes tax evasion. That said, not all webtoon corporations are subject to VAT.
If a corporation engaged in publishing directly supplies content classified as electronic publications by the Ministry of Culture, Sports and Tourism, VAT is exempted. Therefore, if a webtoon artist registers their corporation under the publishing business, obtains an International Standard Book Number (ISBN) or similar identification number such as an International Standard Serial Number, and directly supplies webtoon content to the platform, they do not have to pay VAT.
However, if even one of the requirements?publishing business registration, ISBN assignment, or direct supply?is not met, the corporation becomes subject to taxation again. The assignment of ISBN has long been a contentious issue in the webtoon industry.
Continuous Criticism That Webtoons Do Not Match Publishing ISBNs
The webtoon industry has consistently pointed out that webtoons serialized by episodes do not align with publishing ISBNs, which are assigned per volume.
Currently, the Korea Creative Content Agency is conducting a commissioned basic research project titled 'Introduction and Utilization Plan for UCI Standard Identification System in the Webtoon Field,' with the report expected by the end of this month.
Shin Ilsook, president of the Korea Cartoonists Association, also said at a recent policy forum, "All artists are exempt from VAT, but it is incomprehensible that only webtoon artist corporations are not exempt," adding, "There are cases where artists are caught off guard and face investigations without prior consideration."
However, since VAT taxation regulations and related precedents for webtoons have already been announced multiple times, some argue that it is difficult to simply dismiss non-compliance as a mere mistake.
Yaongi, who is under suspicion of tax evasion, is a representative star artist of Naver Webtoon, with her major work 'True Beauty' having recorded a global cumulative view count of 5.8 billion. Because she serialized a globally popular work generating significant revenue, there are criticisms that the tax aspects should have been examined more meticulously.
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