Tax agency launches all-out probe of private tutoring institutions

The Korea Times

The Korea Times

Finance

Mon, December 4, 2023 | 14:57

Companies

Tax agency launches all-out probe into private tutoring institutions

Posted : 2023-06-29 16:49

Updated : 2023-06-30 14:21

A pedestrian walks past Megastudy headquarters in Seoul, Wednesday afternoon. The cram school operator faces a probe from the nation's tax authority. Yonhap

By Lee Min-hyung

The tax authority has launched sudden probes into major private tutoring institutions, in an apparent exercise of political pressure after popular private educators complained about the government's education policy.

Megastudy is in the center of the spotlight after the National Tax Service (NTS) launched a special tax investigation into the nation's largest cram school chain.

This came a day after Megastudy Chairman Son Joo-eun stepped up criticism of President Yoon Suk Yeol's negative stance toward private tutoring. Yoon ordered education authorities to exclude so-called "killer questions" in the College Scholastic Ability Test (CSAT).

"The education authorities created the killer questions and the private education system has responded to it," Son said during a televised program, Tuesday.

Following the remark, the NTS decided to investigate not just Megastudy, but other major private institutions ― such as Jongro Academy.

It is considered rather unusual for the tax authority to launch unexpected probes into multiple private tutoring institutes. The NTS has escalated the investigation into a group of 10 cram schools, and is looking into whether they engaged in tax evasion acts.

Shares of Megastudy dropped 3.45 percent at 10,640 won ($8) per share on the secondary Kosdaq stock market, Thursday.

Other stocks related to private tutoring here were also hit by the government's increase in pressure. Shares of Woongjin Thinkbig fell by 1.11 percent during the same period. Other Kosdaq-listed education stocks ― such as IB Kimyoung, YBM Net and Creverse ― extended losses with a drop of 3.74, 5.92 and 5.54 percent respectively from a day earlier.

Aside from the NTS, other authorities ― such as the Fair Trade Commission (FTC) ― will also launch a probe into the private tutoring industry to crack down on their false and exaggerated advertisement activities.

Last year, the FTC slapped a fine of 286 million won on Eduwill for violating a local advertisement act. The Ministry of Education is also receiving reports of private tutoring institutions overcharging students, thereby violating the law.

mhlee@koreatimes.co.kr

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