How Influencers Are Taxed Under Current Rules in Korea
Part 1: How Influencers Are Taxed Under Current Rules in Korea
Business Registration and Income Tax
- Mandatory Registration: All influencers who regularly earn income from online activities (advertising, sponsorships, merchandise sales, paid subscriptions, viewer donations) must register as business operators.
- Income Declaration: Influencer earnings, whether received from domestic or foreign sources, must be declared under a specific tax code introduced to reflect the status of content creators as business operators. Income must be reported even if it arrives in the form of viewer donations or voluntary contributions—these are explicitly recognised as taxable under Korean law.
- Tax Rates: Standard progressive individual income tax rates apply, ranging from 6% to 45% depending on total taxable income, plus a local surtax. Independent content creators report this on their annual tax returns.
- Value-Added Tax (VAT): If annual revenue exceeds a threshold (e.g., KRW 30 million), creators must also register for VAT and pay 10% on applicable transactions.
Withholding and Reporting
- Foreign Payments: Platforms such as YouTube generally pay Korean influencers from abroad, for example, through the Google Asia office in Singapore. The Korean tax authority (NTS) monitors foreign exchange receipts exceeding $10,000 annually to ensure such income is reported correctly. Foreign income must be combined with domestic income for tax purposes.
- Business Income versus Hobby: The boundary is set between personal or hobby activities and a structured business. Consistent, significant income or paid promotions require registration and payment of business income tax.
- MCN-Affiliated Creators: Creators managed by multichannel networks (MCNs) have their income reported directly to tax authorities by the agency, which makes compliance more straightforward.
Special Provisions and Benefits
- Tax Incentives for Young Entrepreneurs: By 2025, creators aged 15–34 working in certain less congested areas qualify for up to 100% tax exemption for five years, subject to limits and location rules. This exemption will be reduced to 75% in 2026 and will only be available up to KRW 500 million annually.
- Compliance Initiatives: For non-compliance involving underreported income or tax evasion, the NTS may impose substantial penalties, conduct audits, and, in severe cases, apply criminal sanctions.
Enforcement and Recent Developments
- Audit Focus: The NTS actively audits high-earning influencers and has increased scrutiny in sectors where income is less transparent, such as viewer donations and irregular payments.
- Enhanced Monitoring: Real-time analysis of large international remittances and financial data now plays a key role in taxing influencers, sealing many earlier loopholes.
- Reporting Requirements Improved: The NTS is creating more detailed forms and guidance to ensure comprehensive reporting of all types of influencer income, including voluntary viewer payments and alternative payment channels.
In summary, influencers in Korea are taxed as business operators under current regulations. Income from all sources—including donations, sponsorships, and foreign remittances—must be declared, with progressive tax rates applied and specific enforcement efforts targeting hidden or irregular income. Special tax exemptions exist for young entrepreneurs in some regions, but audits and penalties have increased, signalling a rigorous and evolving approach by Korean authorities.
Part 2: Influencer Taxation in South Korea: Addressing the Blind Spots
Overview
The rapid expansion of Korea's digital content creator economy—comprising YouTubers, streamers, TikTokers, and other influencers—has attracted new attention from tax authorities.
As content monetisation becomes more advanced and profitable, the Korean government faces increasing difficulties in accurately verifying, tracking, and taxing the incomes of online creators. Tax authorities are responding with increasingly robust measures, yet significant blind spots remain.
Why Influencer Income Presents a Tax Blind Spot
Korea regards influencer income as a tax blind spot due to several interrelated factors:
- Complex and Diverse Revenue Streams: Influencers earn income from ads, sponsorships, merchandise, subscription payments, and particularly viewer donations. Donations can be received through various digital channels and sometimes appear disguised as "gifts" or "subscriptions," making it difficult to classify and account for as taxable income.
- Cross-Border and Foreign Transactions: A substantial portion of influencer earnings comes from global platforms like YouTube, which pay Korean creators from overseas hubs such as Google's Singapore office. While South Korea flags foreign currency transfers above $10,000, creators can split payments into smaller amounts or use multiple accounts, thereby evading easy detection.
- Independent Creators and Decentralised Management: Those affiliated with multichannel networks (MCNs) have their income transparently reported by the agency. Independent creators—or those managed from abroad—operate outside this system, making their earnings less visible to Korean authorities.
- Use of Alternate Identities and Shadow Accounts: Some creators utilise bank accounts registered under family or third-party names to receive and conceal income, further complicating the traceability of revenue streams.
- Rapid Industry Change and Rgulatory Lag: The influencer industry’s fast innovation often outstrips both regulations and the digital capabilities of tax enforcement agencies, creating loopholes and grey areas exploited by some creators.
- Low Voluntary Compliance: Many influencers, especially micro-creators or those receiving irregular donations, do not fully report their income because of limited oversight and the belief that such payments are difficult to trace.
Government Measures to Prevent Tax Evasion
Recognising these challenges, the Korean government and National Tax Service (NTS) have considerably increased their efforts to clamp down on tax evasion by social media creators.
- Mandatory Business Registration: Anyone earning ongoing income through content creation must register as a business and submit the appropriate tax returns, covering all forms of monetisation.
- Targeted Tax Investigations: Audits of high-earning influencers have increased. From 2019 to 2024, the NTS investigated 67 creators, uncovering 23.6 billion won (approximately $17.1 million) in unpaid taxes, and levying record penalties.
- Foreign Currency and Banking Oversight: Authorities collect transaction data from banks and the Bank of Korea, focusing on foreign currency receipts and domestic transfers that may indicate concealed or underreported income.
- MCN Reporting Requirements: Agencies managing creators must submit detailed income records, which makes it easier to verify and tax influencers under their umbrella.
- Enforcement and Penalties: Failing to report income can lead to significant fines, audits, and criminal proceedings, particularly in cases of repeated or large-scale non-compliance.
- Digital Tax Administration: The NTS uses digital and automated systems for filings (like HomeTax), risk profiling, real-time transaction monitoring, and algorithmic audits to better track digital income flows.
- Calls for Stricter Regulation: Lawmakers have urged for even more rigorous policies on donation tracking and cross-platform payment verification.
Effectiveness and Remaining Challenges
Tax authorities have made notable progress:
- The number and thoroughness of audits have grown, leading to greater recovery of unpaid taxes and establishing a benchmark for prominent non-compliant creators.
- The targeting of newer trends, such as Excel broadcast donations and deepfake gambling streams, demonstrates adaptability in enforcement.
Persistent challenges remain, however:
- Tracking remains challenging for independent creators, those working abroad, or those relying mainly on difficult-to-trace domestic donations.
- Authorities acknowledge persistent issues with small and opaque income streams, and some creators persist in exploiting the system using alternative accounts or fragmented payments.
Conclusion
South Korea’s efforts emphasise both the advancements and the limitations of regulating the digital influencer economy. While robust enforcement tools and targeted audit campaigns have boosted compliance among established creators, structural blind spots in reporting and cross-border transactions still exist. As the digital landscape develops, so too must government tools and policies to ensure fairness and transparency for Korea’s growing online creator sector.
Get In Touch
For more information please contact Michael Velten.
michael@veltenadvisors.com
+6590687547
391B Orchard Rd, Level 22, Ngee Ann City Tower B, Singapore 238874
More insights about How Influencers Are Taxed Under Current Rules in Korea :
Taxation of Influencers in Taiwan: Current Rules, Challenges, and the Impact of New Regulations
Find out more
China’s Influencer Tax Crackdown: Compliance, Transparency, and Impact on Industry Growth
Find out more
