South Korea’s entertainment industry is experiencing a fundamental structural shift as established artists increasingly exit major agencies to launch independent operations. These one-person entertainment companies — termed il-in gihoeksa (일인 기획사) in Korean — allow performers to retain intellectual property rights, negotiate contracts directly, and capture substantially higher revenue shares than traditional agency arrangements permit.
Government data obtained by National Assembly member Jeong Yeon-wook indicates that registered entertainment agencies increased 73% between 2021 and 2025, reaching 6,140 total entities. A January 2026 Korea Creative Content Agency survey documented a corresponding shift in artist affiliation patterns: Solo label representation rose from 2.5% to 4.3% between 2020 and 2024, while major agency affiliation declined from 14.8% to 9.1%.
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The migration reflects significant tax arbitrage opportunities. South Korea’s top marginal personal income tax rate reaches 45% on earnings above approximately $730,000, while corporate rates cap at 25%. Solo label structures enable expense deductions unavailable to individual taxpayers, creating substantial advantages for high-earning performers.
BoA, whose 25-year tenure at SM Entertainment established early templates for Korean pop exports, terminated her contract on Dec. 31. She then launched BApal Entertainment in March 2026, framing the venture as an artist-fan collaboration. BLACKPINK members pursued parallel strategies when their individual YG Entertainment contracts expired in 2023, maintaining group activities through the original agency while establishing separate entities for solo work: Jennie founded Odd Atelier, Jisoo launched BLISSOO, and Lisa started LLOUD, while Rosé signed with producer-run boutique TheBlackLabel.
The regulatory implications surfaced dramatically in January. Seoul’s National Tax Service assessed actor and ASTRO member Cha Eun-woo approximately 20 billion won ($14.5 million) in unpaid taxes, reportedly the largest individual entertainer assessment in Korean history. Investigators determined that a maternal family-managed company holding a service contract with his agency, Fantagio, lacked operational substance, and reclassified income under personal rather than corporate tax treatment. Fantagio received separate assessments totaling $6 million for alleged false invoicing.
Cha Eun-woo has filed for administrative review contesting the determination. The timing — disclosure occurred during his mandatory military service — compounded the reputational exposure. The case represents one of multiple high-profile assessments: actors Lee Ha-nee, Yoo Yeon-seok, Jo Jin-woong, and Lee Jun-ki all received tax bills in 2025 linked to solo label arrangements, with reported amounts ranging from approximately $660,000 (Lee Jun-ki, 9 billion won) to $5.1 million (Yoo Yeon-seok, 70 billion won). All have initiated dispute proceedings.
The investigations exposed institutional gaps in regulatory architecture. Entertainment agency registration operates through municipal governments without centralized coordination, as the Ministry of Culture, Sports and Tourism lacks statutory authority to aggregate operational data, monitor compliance or enforce standards across thousands of registered entities.
In March, National Assembly member Jeong introduced legislation establishing central oversight mechanisms. The proposed framework mandates annual reporting to the Ministry of Culture and prohibits individuals with criminal tax convictions from operating or working within entertainment agencies. Industry observers have characterized the measure as a response to the Cha Eun-woo case.
“It is natural for entertainers to leave agencies and set up companies in their own names,” Jeong stated. “But an agency that has no actual management function and exists only to reduce taxes — that’s what a lot of people in the industry will tell you is fairly common. What we’re trying to fix is the regulatory blind spot, not the concept.”
The tension is fundamentally structural. Solo labels represent legitimate pathways to artistic and economic autonomy for performers who have built substantial global brands. Simultaneously, tax optimization advantages are material, and distinguishing aggressive but legal tax planning from impermissible evasion requires clear adjudicatory frameworks. South Korean courts have frequently ruled favorably for artists in final determinations, particularly when companies demonstrate documented staffing and business operations. Industry advocates contend that National Tax Service initial assessments exhibit systemic overreach and impose disproportionate reputational and financial costs on artists who ultimately prevail.
What remains undisputed is regulatory lag relative to industry evolution. As more performers pursue independence in a sector generating billions in global revenue, the central question shifts from whether artist-operated companies should exist to whether government infrastructure can effectively distinguish legitimate enterprises from tax optimization structures in real time.
This story was originally published by Billboard Korea.
