246 Tax Investigations on Academies and Loan Businesses Since Yoon Seok-yeol Government Inauguration
105 New Investigations Started on Stock and Coin Leading Room Operators
"Strong Response to Tax Evasion Harming Livelihoods"
A star instructor was caught by the National Tax Service (NTS) for embezzling lecture fees and textbook costs through a corporation to reduce personal income, and disguising a luxury supercar as a company vehicle to expense the costs. Additionally, some academies received tuition fees in cash or under borrowed names without reporting them, and an active teacher was found to have evaded taxes by receiving payments from an academy under the pretext of problem setting, according to investigation results.
On the 30th, the NTS announced that since the current government took office until last month, it conducted tax audits on 246 individuals in sectors such as academies and loan businesses, recovering over 220 billion KRW.
On the 30th, Jeong Jae-su, Director of the National Tax Service Investigation Bureau, is briefing the results of tax investigations on academies and loan businesses.
Jung Jae-su, Director of the NTS Investigation Bureau, stated, "We have been conducting intensive tax audits since the current government took office to strictly punish tax evaders who exploit ordinary citizens by taking advantage of high interest rates, inflation, and the overheated college entrance exam atmosphere." He added, "Along with recovering evaded taxes, we conducted tax criminal investigations on 10 individuals confirmed to have committed tax evasion and violations of tax order, resulting in prosecution or administrative sanctions."
Academies and Instructors Leading Luxurious Lives by Receiving Tuition Fees in Cash or Under Borrowed Names and Omitting Income
According to the NTS, some star instructors, while enjoying fame and high income based on the expectations and trust of examinees, evaded taxes by dispersing income through corporations. As lecture and textbook sales increased, they established related-party corporations and attributed lecture fees and royalties, which should have been received by the instructors, to the corporations to disperse income and reduce personal income tax. They also treated purchases of expensive artworks and luxury clothing as business expenses and disguised luxury supercars as company vehicles to expense related costs.
Tax evasion by academies that led high-income, luxurious lifestyles by inducing private education while exploiting the anxiety of students and parents was also confirmed. Some academy operators received tuition fees in cash or under borrowed names, failing to report the income. They operated small-scale private tutoring within the academy and collected tutoring fees through their children's accounts as indirect gifts. They also treated personal expenses such as apartment rent as corporate expenses and used corporate credit cards for fine dining at upscale restaurants and luxury hotels for personal luxury living.
During tax audits of the academy business, tax evasion by active teachers was also uncovered. Some active teachers sold exam problems to academies and received payments through borrowed or indirect family accounts to evade progressive personal income tax. In this process, the academies submitted false payment statements to the NTS, pretending to have paid income to the teachers' families to assist their tax evasion.
Malicious Loan Sharks Charging Up to 9000% Annual Interest Through Pyramid Organizations
Malicious loan sharks who lent money to credit-vulnerable groups struggling with financial difficulties at interest rates exceeding the legal limit and failed to report the interest income were also caught.
According to the NTS, loan shark C operated an unregistered loan business as a corporate entity, charging credit-vulnerable groups an ultra-high interest rate exceeding 9000% annually. Investigations revealed that they purchased information on credit-vulnerable individuals rejected by regulated financial institutions from loan brokerage websites and used it for business. Through a nationwide pyramid-structured organization, members collected interest payments and received them through multiple borrowed-name accounts and cash, completely omitting the income from reporting. C actively concealed assets by purchasing luxury apartments and yachts under borrowed names and led a lavish lifestyle, spending tens of millions of KRW daily on entertainment expenses.
Additionally, tax evasion by funeral service providers who exploited bereaved families for excessive profits and franchise headquarters that extorted franchise fees from livelihood-type franchisees without reporting them were also uncovered through tax audits.
Tax Audits Launched on 105 Individuals Including Stock and Coin Leading Room Operators
Despite continuous tax audits on tax evaders harming the public, the NTS found that outrageous profiteering targeting vulnerable groups and sophisticated tax evasion using new methods continue, prompting additional tax audits. The targets include ▲ stock and coin leading room operators (41 individuals) ▲ hospitals and related businesses benefiting from the COVID-19 boom (12 individuals) ▲ illegal loan sharks (19 individuals) ▲ profiteering tax evaders in food manufacturing and other sectors exploiting high inflation (33 individuals), totaling 105 individuals.
The NTS believes some stock leading room operators induced retail investors to join "VIP memberships" through false advertisements guaranteeing 300% returns and undisclosed surge stock information, receiving high membership fees amounting to hundreds of millions of KRW through unregistered electronic payment gateway (PG) companies, thus omitting sales reporting. They also launched tax audits on food manufacturing and distribution companies that evaded value-added tax by disguising taxable packaged foods as tax-exempt and omitted income reporting by selling products individually via social media advertisements.
Director Jung said, "We will conduct even stricter tax audits on tax evaders who earn high profits while burdening ordinary citizens. Especially for malicious and sophisticated evasion, we will utilize all tax audit tools, including on-site financial transaction verification and forensics, to recover evaded taxes and strongly respond by prosecuting under the Tax Crime Punishment Act if tax evasion or violations of tax laws are confirmed."
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