Amid a surge in domestic performances by foreign acts, including overseas artists, following the COVID-19 pandemic, it has been confirmed that tax authorities inspected relevant tax practices and collected approximately 5.5 billion won in additional taxes from domestic and foreign performance personnel, including foreign artists.

According to the office of Representative Jung Tae-ho of the Democratic Party of Korea, who sits on the National Assembly's Finance and Economy Committee, on the 17th, the National Tax Service (NTS) reviewed the appropriateness of withholding taxes on 110 individuals related to foreign performances in Korea last July. The audit uncovered omitted reporting from 39 of them, resulting in a total collection of 5.563 billion won.

Under current laws, foreigners wishing to perform in Korea or those inviting foreigners to hold domestic performances must receive a recommendation from the Korea Media Rating Board.

The NTS receives these recommendation data from the board every quarter and utilizes them for taxation.

While the NTS did not utilize this data during 2020 and 2021 when COVID-19 spread and performances themselves plummeted, related tax data surged again as domestic performances by foreigners rebounded following the transition to the endemic phase.

Specifically, the number of cases jumped more than fourfold in three years, rising from 682 cases in 2021 to 1,857 cases in 2022, 2,425 cases in 2023, and 2,824 cases in 2024.

Accordingly, the NTS compared and analyzed foreign performance data in Korea from 2022 to 2024 against foreign exchange data and payment statement records to screen targets suspected of omissions.

Specifically, targets were selected for withholding tax appropriateness reviews and subsequent tax collections if they failed to submit payment statements for personal services provided by non-residents despite performance compensation exceeding a certain amount, or if they had applied for three or more domestic performances while suspected of failing to report or underreporting withholding taxes.

Representative Jung stated that as the issue of omitted tax reporting on performance compensation paid to foreign performers has been confirmed through actual tax collections, the relevant system must be improved.

"As performances in Korea by famous overseas artists continue to follow one another, tax administration regarding the domestic income of foreign performers must be carried out with greater care," he said, adding, "The National Tax Service should closely inspect taxation practices and supplement the management system to prevent repeated reporting omissions."
(Photo: Yonhap News)