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Tax authorities target YouTubers

And other new tech where income moves hidden from view
Oct 18,2019
A YouTuber with several million followers did not report the massive income earned from advertisements that popped up on the video platform, though they claimed tax refunds after expensing personal shopping, including purchases at departments stores lodged as business expenses.

A fashion wholesaler used social media to sell products. Yet the wholesaler intentionally falsified the income earned through social media.

A famous Korean celebrity collected profits from selling fan meeting tickets and celebrity goods in bank accounts opened under the names of relatives and purchased high-end real estate and expensive cars while also spending huge amounts overseas.

The celebrity committed other tax fraud, including getting tax refunds after deducting personal spending, on expensive meals and high-end vehicle leases, as business expenses and by creating false jobs for several relatives.

These were a few of the 122 cases that the National Tax Service (NTS) said on Wednesday it is intensively examining.

The list includes not only YouTubers, celebrities and social media influencers, but also popular restaurant owners.

They reportedly earned more than 1 billion won ($850,000) a year.

According to the NTS, it has placed the suspected tax dodgers into three categories.

Among the alleged tax dodgers, 54 work in new and rising industries in which funds cannot be traced using the conventional auditing system, including platforms like Youtube or Instagram.

In the second group, 40 people are suspected of using tax dodging schemes, while the remaining 28 are those who have lived extremely luxurious lifestyles despite having no record of income.

The NTS said since April it has been auditing cases related to new technologies, including streaming platforms that were previously in the tax authority’s blind spot.

“Recently we have been checking on such rising new and popular areas so that there would be no tax omission,” said an NTS official. “We will strictly penalize those intentionally committing tax evasion.”

The NTS has been tightening its auditing of YouTubers and Instagrammers, as many have been reported to have not been filing in their income taxes despite huge advertising profits.

Tracking down the actual income of YouTubers and Instagrammers has not been easy for the tax agency, as many operate as individuals rather than corporations, and therefore, the tax agency has to rely on their honesty when it comes to income tax.

The main source of information is that collected by the Bank of Korea on offshore financial transactions of more than $10,000.

Earnings made in Korea by YouTube channels are paid by YouTube’s Asia office in Singapore.

The NTS said in the last two years it has investigated 1,789 high-income earners and levied unpaid taxes amounting to 1.37 trillion won. Among those investigated, 91 were reported to prosecutors.

Last year alone, 881 people with high incomes were investigated for tax dodging, and the government collected 659.9 billion won, which it said was not only a 10 percent increase from the previous year, but an all-time record.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]