South Korean lawmakers are pushing legislation to address tax evasion controversies surrounding one-person entertainment agencies, amid growing scrutiny of alleged tax irregularities involving actor Cha Eun-woo and actress Lee Ha-nee.
Rep. Jeong Yeon-wook of the ruling People Power Party, a member of the National Assembly's Culture, Sports and Tourism Committee, announced on the 3rd that he will introduce an amendment to the Popular Culture and Arts Industry Development Act aimed at eliminating regulatory blind spots and strengthening tax compliance in the entertainment sector.
The move comes after Cha faced allegations involving approximately 20 billion won ($14 million) in taxes and Lee became embroiled in a controversy over roughly 6 billion won, spotlighting tax avoidance structures using solo agencies.
According to data submitted by the Ministry of Culture, Sports and Tourism to Jeong's office, 6,140 entertainment management companies were registered as of the end of last year. New registrations surged from 524 in 2021 to 907 last year, driven by the K-content boom and the proliferation of one-person agencies established by individual celebrities.
Currently, all registration, modification and closure procedures for agencies fall under local government jurisdiction. The Culture Ministry lacks legal authority to comprehensively manage or supervise agencies nationwide, creating what critics call a regulatory vacuum.
The proposed amendment would require agency operators to report their registration and business status annually to the Culture Minister, establishing a centralized oversight system. Local government actions would also be reported to the ministry.
The bill also significantly tightens eligibility requirements. While current law bars sex offenders and child abusers from the industry, no restrictions exist for tax evaders. The amendment would prohibit those convicted of violating the Punishment of Tax Offenses Act from registering agencies or working at such firms.
"The increase in one-person agencies is a natural industry trend, but it is an open secret that many are paper companies established solely to reduce taxes without any actual management function," Jeong said.
"We can no longer ignore the pattern of celebrity names repeatedly appearing whenever the National Tax Service releases lists of major tax delinquents or audit results," he added.
Jeong called on the Culture Ministry to "take direct management and supervision responsibilities rather than maintaining a passive stance simply because the matter has been delegated to local governments."
The amendment is considered the first institutional measure to enhance transparency and accountability in the entertainment industry. However, concerns have been raised that it could be perceived as excessive regulation treating all one-person agencies as potential tax evasion vehicles, suggesting detailed criteria will likely be debated during parliamentary deliberations.