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Tax Evasion by High-Income Youtubers in Korea. Is There a Way to Stop It?

Tax evasion has become an unstoppable problem as people pay taxes and socioeconomic inequality inheres in our society. With celebrities and major companies in the upper ranks routinizing tax evasion, the nation has become under not only economical, but also potential social risks.

The digital technology has advanced to the stage where both children and adults have become more accessible to the Internet, with new forms of media introduced around the world.

Today, the platform YouTube has come into the spotlight. The number of current YouTube channel subscribers in Korea has increased from 367 in 2015 to 274 in 2016 and 1,275 in 2017. The National Tax Service conducted a probe into high-yield YouTubers suspected of tax evasion and seven of them have been recently caught having evaded a total of 37,901 USD in income. The National Tax Service levied a total of 8,422 USD in taxes on them as a consequence. It is the first time in Korea that the income and amount of tax evasion by highincome YouTubers have been disclosed.

How do Youtubers, or equivalent live streamers report their taxes? Are they considered employees to the platform or to themselves? There are usually two ways that they report their taxes.

The first case belongs to YouTubers affiliated with a Multi-Channel Network (MCN) company (A company that supports broadcasting planning, production, transmission, promotion and allocates profits to multi-channel networks, operators, etc.). In this case, the company reports a comprehensive income tax after withholding 3.3% when the Youtubers receive income from the service provider.

The second is the self-reporting of comprehensive income, a method which tends to be difficult to audit if individuals do not report it. Currently, the only way authorities can tax high-yield YouTubers that make more than $10,000 per person annually is for the National Tax Service to receive data from the Korean banks and conduct private investigations. The standard of $10,000 is due to foreign exchange transaction laws and regulations. In order for a government institution to identify foreign transactions, the transferred amount must be greater than 10,000 USD a year. But even in this way, the tax evasion problem still prevails because YouTubers can still distribute taxes under a third name.

The government authorities and related institutions must take appropriate measures to prevent these problems. The first solution is to find out the size of taxation by creating a new industry code. The National Tax Service clarifies the industry code to one-person media content creators, SNS markets, and online marketplaces for arranging or offering lodging such as Airbnb as Information Technology grows. The second one is to strengthen the tax source management measures for tax loophole. In addition to these methods, there is a necessity to devise and implement various measures.

Sooyon Hong, Tax Advisors for Champaign Society (TACS)

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