When The Phone Rings star Yoo Yeon-seok's tax penalty reduced from 7 billion KRW to 3 billion KRW

The famous South Korean actor Yoo Yeon-seok, known for When The Phone Rings and Hospital Playlist, was recently embroiled in a major tax scandal.

The National Tax Service (NTS) first charged him a tax bill of about 7 billion KRW (roughly $4.8 million). On April 10, 2025, Allkpop confirmed that after lodging an official objection and subsequent investigation, the amount was dramatically lowered to 3 billion KRW (around 2.3 million).

The tax complications arose from Yoo Yeon-seok's establishment of his personal agency, Forever Entertainment. This agency was created to manage various aspects of his entertainment career. This included the development and production of YouTube content and his ventures into the food and beverage industry.

The NTS conducted a thorough audit of Forever Entertainment's financial activities over the past five years, which resulted in the substantial tax imposition.

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Yoo Yeon-seok's tax dispute: Genesis of the tax issue and discrepancies; agency responds

A core issue in this dispute was the differing interpretations of tax obligations between Yoo Yeon-seok's tax representatives and the NTS. GMA reported that the NTS classified the income generated by Forever Entertainment as personal income, thereby subjecting it to personal income tax rates.

In contrast, the When The Phone Rings actor's representatives contended that these earnings were corporate income and should be taxed accordingly. This fundamental disagreement led to the initial hefty tax bill.

In response to the NTS's findings, the actor's management agency, King Kong by Starship, issued an official statement. The agency asserted that the issue stemmed from "differences in opinions on the interpretation and application of the tax law between tax agents and tax authorities." The agency said:

"This issue stems from differences in opinions on the interpretation and application of the tax law between tax agents and tax authorities, and is awaiting notification from tax authorities after a pre-taxation review. It is not currently finalized and notified, and issues related to legal interpretation and application will be actively explained in accordance with due process."

The agency further clarified:

"Yoo Yeon-seok has made fulfilling his tax obligations with integrity, and as a member of the people, he will continue to thoroughly comply with relevant laws and procedures and fulfill his responsibilities."

Korea JoongAng Daily reported that in March 2025, the actor filed for a pre-assessment review in January to contest the NTS's assessment. This procedure allows taxpayers to dispute tax authorities' decisions involving internal and external committee members in the evaluation process.

Yoo's team actively engaged in this process, aiming to rectify what they perceived as an unjust assessment.

The proactive approach taken by the When The Phone Rings actor and his representatives bore fruit when the NTS reconsidered its initial assessment. Following extensive discussions, the tax authority was willing to settle the matter by lowering the tax assessment from the original 7 billion KRW to about 3 billion KRW.

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Yoo Yeon-seok's tax case is not an isolated incident in the South Korean entertainment industry. Other celebrities, including actress Lee Ha-nee, have also been investigated similarly.

Lee Ha-nee was audited for tax purposes, resulting in an additional 6 billion KRW owed in taxes. Lee Ha-nee agency said the tax assessment stemmed from "interpretation of the law that differs from our own", similar to Yoo Yeon-seok.