Because of this, labels can omit their overseas profits and evade taxes. There is bigger suspicion on tax evasion through sales omissions and double contracts than when transactions are done in Korea. Since it is harder to follow up on tax authorities overseas, there is a high possibility of other tax evasion, such as through the creation of foreign slush funds.

SM Entertainment�has denied being the subject of a special tax evasion investigation. However, they may still be under scrutiny along with YG Entertainment, JYP Entertainment, and other labels who have offices overseas.