'5.3 Billion Won Revenue Omission' Jang Geun-seok's Mother's Company Loses Corporate Tax Cancellation Appeal in 2nd Trial

The entertainment agency established by actor Jang Geun-suk's mother lost again in the appellate court in a lawsuit seeking to cancel the 300 million won corporate tax imposed for hiding 5.3 billion won in overseas activity income.

Actor Jang Geun-suk. Photo by Asia Economy DB

According to the legal community on the 19th, the Seoul High Court Administrative Division 8-3 (Presiding Judges Shin Yong-ho, Jeong Chong-ryeong, Jo Jin-gu) ruled against the plaintiff, Bom Bom Co., Ltd. (formerly Tree J Company), in the appeal trial of the lawsuit filed against the Gangnam Tax Office Chief and the Seoul Regional Tax Office Chief to cancel the corporate tax imposition, just as in the first trial.

Tree J Company is an entertainment agency founded and majorly owned by Jeon, the mother of Mr. Jang. In December 2020, the company changed its name to Bom Bom, and in March of the following year, Jeon’s sister became an inside director and CEO. A tax investigation in 2016 revealed that the company managed approximately 5.38 billion won of income from 2012 in overseas accounts and failed to report it.

The company voluntarily paid the corporate tax corresponding to the omitted amount immediately after the tax investigation began, but the authorities notified them to pay an additional 320 million won including penalties for false and underreporting.

In response, the company filed an administrative lawsuit, claiming, “There was no intention to evade corporate tax; it was merely an underreporting of the tax base.”

However, the first trial court ruled that the tax authorities’ disposition was lawful. The court stated, “The plaintiff received corporate income through overseas accounts of Jeon, which were difficult for the tax authorities to trace, did not record the details in the accounting books, and did not report the related corporate tax or value-added tax, resulting in tax avoidance.”

The second trial also upheld the first trial’s judgment, stating, “The plaintiff concealed sales amounting to about 5.3 billion won through overseas accounts, which reduced the state’s tax revenue, and the plaintiff was aware of this.”