Actress Lee Ha-nee (41), who was reported to have paid an additional 6 billion won in taxes after a tax investigation, has reiterated her explanation regarding the tax evasion allegations.
On the 7th, Lee Ha-nee's agency, Team Hope, stated, “We sincerely apologize for causing concern to many due to the recent media reports regarding tax issues,” and released an official statement.
The agency explained through Lee Ha-nee's legal representative and accountant, “In addition to her activities as an actress under management, Lee Ha-nee established a corporation called Hope Project in 2015 for various activities such as traditional music performances, content development and production, and investments.”
Regarding the tax investigation conducted in 2024, they clarified, “As part of the 'Irregular Comprehensive Tax Investigation for Corporate Business Artists (investigation period of 5 years)', we clearly state that no tax evasion or evasion facts such as income reporting omissions or false expense claims were found during this investigation process.”
They continued, “The tax authorities interpreted that the income from the entertainment activities of artists with corporate business entities should be subject to personal income tax rather than corporate tax as corporate income.” They added, “As a result, personal income tax was reassessed on the amount that was reported and paid as corporate income through a tax representative.”
They stated, “As a result, double taxation and additional taxes on the same income occurred, and the amount imposed was significantly higher than the amount calculated at the highest tax rate under tax law,” and “The current tax disposition is not final. We plan to actively clarify the issues of double taxation and legal interpretation through legal procedures in the future.”
The agency stated, “As explained above, the income tax assessment resulting from this tax investigation stems from a difference in legal interpretation regarding which tax category the income of artists with corporate business entities should be paid under, corporate tax or income tax,” and “Lee Ha-nee has respected the tax authorities' disposition and paid the full amount of tax, which significantly exceeds the amount calculated at the highest tax rate.”
They added, “The current tax disposition is not final, and in the future, we will appoint a tax law firm to seek legal judgment on the issues of double taxation and legal interpretation and actively clarify them,” and “Lee Ha-nee has fulfilled her tax obligations in compliance with laws and procedures as a citizen of South Korea and will continue to diligently fulfill her tax obligations in the future.”
In February, allegations of tax evasion against Lee Ha-nee were raised. The Seoul Regional Tax Office conducted a rigorous tax investigation against Lee Ha-nee and Hope Project in September of last year, resulting in the collection of taxes amounting to 6 billion won, including income tax. This amount is significantly higher compared to the penalties imposed on past actors such as Song Hye-kyo, Kwon Sang-woo, and Park Hee-soon.
At that time, the agency stated, “Lee Ha-nee underwent an irregular comprehensive tax investigation for corporate business artists at the Seoul Regional Tax Office last year and paid additional taxes during this process,” and “Lee Ha-nee has diligently fulfilled her tax obligations in compliance with laws and procedures under the advice of her tax representative. This tax is an additional tax due to differences in perspective between the tax authorities and the tax representative and is in no way related to intentional tax omissions.”
The following day, the media reported, “Lee Ha-nee's personal planning company, Hope Project, which had a capital of only 10 million won at the time of establishment, purchased real estate worth 6.5 billion won in the name of the corporation just two years after its establishment, but questions have been raised about the source of the funds.”
The real estate is located in Hannam-dong, Yongsan-gu, Seoul, on a 332㎡ (approximately 100 pyeong) plot of land with a two-story building with a total floor area of 173.63㎡. From March 2018 to October 2020, the corporate address of Hope Project was registered there, and it is currently operating as a restaurant. It is estimated that Hope Project is generating rental income from this property, and the current market price is expected to reach 10 billion won.
The media pointed out, “There may be criticism that Lee Ha-nee, who was imposed the highest level of tax penalties from the National Tax Service, has neglected her tax obligations while being proactive in increasing her personal assets through real estate investments using her corporation.”
The Gangnam Police Station received a public petition on February 20 to investigate the allegations of tax evasion against Lee Ha-nee and began a preliminary investigation (inquiry) before filing charges.
Lee Ha-nee is set to return to the small screen with the upcoming Netflix original drama 'Aema.'
<Below is the full official statement from Lee Ha-nee>
Hello, this is Team Hope.
First of all, we sincerely apologize for causing concern to many due to the recent media reports regarding tax issues involving our agency's actor, Lee Ha-nee.
We would like to convey Lee Ha-nee's official position, and we would appreciate it if you could take the time to review it despite your busy schedule. We also apologize for the delay in delivering this statement.
<Summary>
Reason and timing of corporation establishment: Lee Ha-nee established a corporation called Hope Project in 2015 for various activities such as traditional music performances, content development and production, and investments, in addition to her activities as an actress under management.
Results of the 2024 tax investigation: The tax investigation conducted last year was part of the 'Irregular Comprehensive Tax Investigation for Corporate Business Artists (investigation period of 5 years)', and we clearly state that no tax evasion or evasion facts such as income reporting omissions or false expense claims were found during this investigation process.
Double taxation of corporate tax and personal income tax: Meanwhile, the tax authorities interpreted that the income from the entertainment activities of artists with corporate business entities should be subject to personal income tax rather than corporate tax as corporate income. As a result, personal income tax was reassessed on the amount that was reported and paid as corporate income through a tax representative.
Current status of tax disposition: As a result, double taxation and additional taxes on the same income occurred, and the amount imposed was significantly higher than the amount calculated at the highest tax rate under tax law. The current tax disposition is not final. We plan to actively clarify the issues of double taxation and legal interpretation through legal procedures in the future.
*We attach the full official statement beyond the summarized content above.
<Full Official Statement>
Clarification regarding the results of the tax investigation
Actress Lee Ha-nee has established and operated Hope Project (hereinafter referred to as the corporation) to carry out various activities such as traditional music performances, content development and production, and investments that cannot be managed or performed by her management, in addition to her main job of acting. The income generated from her entertainment activities has been reported as corporate income to separate the business assets or rights and obligations from her personal assets or rights and obligations, and she has diligently paid corporate taxes.
Recently, during the 'Irregular Comprehensive Tax Investigation for Corporate Business Artists (investigation period of 5 years)', there was an interpretation from the tax authorities that even if Lee Ha-nee's income from entertainment activities was fully taxed as corporate income, it should be subject to personal income tax rather than corporate tax. Consequently, an additional personal income tax assessment was made, which Lee Ha-nee paid in full.
In this process, Lee Ha-nee was subject to the general additional tax rate applied in cases of differences in tax law interpretation or simple mistakes, rather than the high additional tax rate applied in cases of fraudulent activities aimed at tax evasion (such as false bookkeeping, destruction of documents, or concealment of income).
Generally, if a taxpayer is found to have engaged in fraudulent activities to evade taxes during a tax investigation, the regular tax investigation is converted into a tax violation investigation, resulting in a more rigorous investigation. However, Lee Ha-nee's investigation concluded with a personal income tax assessment without a tax violation investigation.
We clearly state that no tax evasion or evasion facts such as income reporting omissions or false expense claims were found during the investigation period regarding her entertainment activities.
General taxation method for corporate businesses
When a corporation engages in its intended business, it is generally the case that corporate tax is paid on the income generated from that business rather than personal income tax. The income generated from Lee Ha-nee's entertainment activities was also reported as corporate income and corporate taxes were paid according to the general tax processing method.
Additionally, funds attributed to the corporation cannot be used personally by Lee Ha-nee; to use them for personal purposes, she must receive funds from the corporation in the form of salary or dividends. In this process, personal income tax is reassessed, so receiving income through a corporation does not reduce taxes; rather, it results in both corporate tax and income tax being imposed, increasing the overall tax burden.
In fact, Lee Ha-nee receives a salary from the corporation and pays income tax normally.
Double taxation related to the assessed tax amount
As mentioned earlier, additional personal income tax was imposed on the amount that was already reported and taxed as corporate income, resulting in double taxation on the same income due to the failure to reflect the previously paid taxes. Consequently, an amount significantly exceeding the highest tax rate under tax law was imposed. More than half of the amount reported in the media corresponds to double taxation and additional taxes.
Future plans
As explained above, the income tax assessment resulting from this tax investigation stems from a difference in legal interpretation regarding which tax category the income of artists with corporate business entities should be paid under, corporate tax or income tax. Lee Ha-nee has respected the tax authorities' disposition and paid the full amount of tax, which significantly exceeds the amount calculated at the highest tax rate. The current tax disposition is not final, and in the future, we will appoint a tax law firm to seek legal judgment on the issues of double taxation and legal interpretation and actively clarify them.
Lee Ha-nee has fulfilled her tax obligations in compliance with laws and procedures as a citizen of South Korea and will continue to diligently fulfill her tax obligations in the future.
For related inquiries, please contact Attorney Lee So-rim (sr.lee@gaonlaw.com), Attorney Kim Song-gyeong, Accountant Baek Young-ki, and Team Hope's PR manager Jang Ae-ri.
Thank you.
