Celebrity building owners are now the subject of investigation by the Korean National Tax Service for potential tax evasion.
According to a report by All Kpop, the Korean National Tax Services are currently looking into the possibility that some celebrities are using legal loopholes to avoid paying the right taxes.
The issue, which was first raised by MBC's PD Note, cited that while the methods were not considered illegal, these enable celebrity building owners to avoid paying more taxes.
Based on the report, some celebrities have purchased properties and registered them under the names of real estate corporations. Among celebrities who listed their buildings under the name of corporations are Lee Byung Hun, Kwon Sang Woo, Han Hyo Joo, Kim Tae Hee.
By listing these buildings under corporations instead of individuals, celebrities reportedly reduce acquisition, capital gains, and rental income tax that they need to pay to the government. They are also shielded from comprehensive real estate taxes that private owners are required to pay.
Based on PD Note's report, Lee Byung Hyun purchased a building worth 26 billion KRW (21.2 million USD) in Yeongeungpo, in Seoul under the name of a family corporation listed in Gyeongido. Kim Tae Hee purchased a 13.2 billion KRW (10.7 million USD) building in Gangnam, but listed her building under a corporation based in Gyeongido, as well. By utilizing corporations that are not based in Seoul, more tax cuts are given by the government.
Kim Tae Hee was reportedly able to save 920 million KRW (750 thousand USD) in taxes due to this method.
Twenty seven corporations are currently being investigated by the National Tax Service as officials acknowledge that this is an area that needs to be managed more strictly.
A previous report by Castko explained why many celebrities are investing their money on the purchasing buildings.Based on the report, small buildings can produce secure profits and its value increases over time. In 2017, a building that BoA purchased for 1.5 billion won in 2006 shot up in value to triple its price. In five year's time, the late Goo Hara also invested wisely in a building for 1.1 billion won and earned a profit of 300 million from its sale.
Even Kpop idols are also purchasing buildings. BIGBANG's Taeyang and Daesung own buildings while CN Blue Jung Yong Hwa also owns a property that he has leased to a bed and mattress company. JYJ's Kim Jejoong and Super Junior's Kyuhyun also own properties in the Gangnam and Myeondeong districts, Kpopmap reported.
