SM Entertainment is reportedly facing the allegations of tax evasions. It has now been asked to pay 20.2 billion won ($18 million) for the government by the National Tax Service on Friday, 5 February.
Reports in the Korean media claim that the agency investigated SM Entertainment over the suspicion of evading tax after the National Tax Service found illegal outflow of capital to other companies.
The company's founder and former CEO Lee Soo-Man, his nephew Lee Sung-soo, co-head of the company, and his nephew-in-law came under the scanner of the National Tax Service. The entertainment company will have to pay 3.19 percent of its net worth which comes to 20,216,665,498 won, to the government.
Reports had alleged that the former CEO, who holds 18.73 percent stake in SM Entertainment, had omitted information about corporate-to-corporate transactions. It should pay the amount on or before 31 March.
Reacting to the latest development, SM Entertainment has stated that the company is going to pay the said amount, but it will go ahead with the appeal process. Despite the allegations, it has reportedly made a loss of 15.6 million won between July and September of 2020.
However, SM Entertainment had undergone such special audit on a few occasions, earlier. It had faced tax evasion allegations in 2009 and 2014 in relation to its overseas business. It had paid a penalty of $10 million won in corporate taxes in 2014.
Similarly, it was forced to pay 2.8 billion won in additional taxes in 2008 and 3.4 billion won in 2016.
SM Entertainment is one of the leading entertainment companies in South Korea. It has successfully created many K-pop groups that include Super Junior, Girls' Generation, EXO, Red Velvet, NCT, SuperM and aespa.