미국에서 공연하는 K-pop 아티스트들의 미국 세무 영향은 매우 중요하다. (G)I-DLE, AESPA, THE BOYZ, GOT7, IVE, IU, VAV 등과 같은 그룹들이 2024년에 미국에서 공연 예정이므로, 이러한 아티스트들은 미국의 복잡한 세법 규정을 이해하고 대응해야 한다. 미국 세법은 외국 아티스트들에게 공연에서 벌어들인 소득에 대한 원천세를 부과한다. 이는 미국과 아티스트의 본국 간 조세 조약에 따라 달라질 수 있으며, 약 66개 국가가 미국과 조세 조약을 체결 중에 있어, 경우에 따라 외국 아티스트들이 공연 관련 소득에 대해 미국 소득세를 면제할 수 있다. 이와 같은 면제 사유가 적용되고 필요한 서류가 제출되면 표준 30%의 공제율이 적용되지 않는다.

아쉽게도, 현재 한국과 미국 간 조세 조약은 아티스트, 연예인 또는 운동 선수들에게 면제나 감면된 세율을 제공하지 않고있다. 따라서 미국에서 공연하는 K-pop 아티스트들은 한국 외 나라에 별도의 시민권이 없는 한 30%의 원천세를 납부해야 한다. 중요한 세금 계획 도구로는 중앙 원천 공제 협약(Central Withholding Agreement or “CWA”)이 있는데, 이는 외국 연예인이 예상 순수 소득과 실제 세금 책임을 기반으로 낮은 공제율을 협상할 수 있도록 한다. 따라서 아티스트들은 이러한 복잡한 세법을 효과적으로 처리하고 세금 상황을 최적화하기 위해 국제 세법 전문가와 함께 작업해야 한다.

대부분의 세금 조약에는 외국 기업의 소득에 대한 미국 세금 면제를 포함하는 "사업 소득 면제” 조항이 있다. 따라서 K-pop 그룹이 미국에 고정 사업장이 없다면 그들의 수입은 완전히 면제될 수 있다. 그러나 이러한 기업은 여전히 공연자에게 지불하는 compensation에 미국 세금을 공제해야한다. 사업 소득 면제 조항 혜택을 받으려면 모든 관련 사실과 법률분석과 문서화가 필요하다.

미국 시장에서 K-pop 아티스트들의 증가하는 존재감은 종합적인 세금 계획의 중요성을 강조한다. 이러한 요구 사항을 이해하고 전략적으로 처리함으로써 아티스트들은 공연에 집중할 수 있으며 안정적인 재정 및 세금 계획을 할 수 있게 되고, 무엇보다도 IRS와의 conflict를 피할 수 있다.

As K-pop continues to captivate a global audience, with groups like (G)I-DLE, AESPA, THE BOYZ, GOT7, IVE, IU, and VAV slated to perform in the United States in 2024, it becomes crucial for these artists to comprehend and address the intricate tax regulations in the US. American tax laws require foreign artists to adhere to a withholding tax on income earned from their performances. This involves grasping the specifics of the withholding tax rate, which may differ depending on the tax treaties between the US and the artist's home nation. Around 66 countries have income tax treaties with the US, which sometimes allow foreign artists to be exempt from US income taxes for their performance-related earnings. If such an exemption is applicable and the necessary documentation is provided, the standard 30% withholding doesn't apply.

Unfortunately, the current tax treaty between South Korea and the United States doesn't offer such exemptions or reduced rates for artists, entertainers, or athletes. Hence, K-pop artists performing in the US are subject to a 30% withholding tax (unless the artists have citizenships in other countries). A vital tax planning tool is the Central Withholding Agreement (CWA), which permits foreign entertainers to negotiate a lower withholding rate based on their estimated net income and actual tax liability, thus offering a more accurate reflection of their tax obligations and aiding in financial planning.

Applying for a CWA requires submitting a detailed proposal to the IRS, including expected income, expenses, tax identification, a detailed schedule of US engagements, and related contracts. The IRS assesses this information to decide on a suitable withholding rate. CWAs aim to balance tax compliance with potentially reduced tax burdens. K-pop artists should, therefore, work with skilled tax professionals specializing in international entertainment tax law to navigate these complexities effectively and optimize their tax standing.

Most tax treaties, including the one between South Korea and the US, include a “business profits” clause that exempts foreign businesses' income from US tax. If a K-pop group is classified as a business without a permanent establishment in the US, their earnings might be entirely tax-exempt. However, such businesses are still responsible for withholding US taxes on payments to their performers, whether they are employees or independent contractors. For instance, if a Korean entertainment company's earnings in the US are exempt under the treaty's business profits clause, it must still withhold US taxes on payments to its entertainers, regardless of their employment status. Unless an exemption applies, the 30% withholding is mandatory for these payments.  A detailed analysis of all relevant facts and laws, as well as documentation, is recommended to claim this treaty benefit.

The increasing presence of K-pop artists in the US market underscores the importance of comprehensive tax planning. By understanding and strategically navigating these requirements, artists can focus on their performances, secure in their financial and tax planning, and most importantly, avoid conflicts with the IRS.

The House passed the Tax Relief for American Families and Workers Act of 2024 (the “Bill”), a $78 billion bill, with provisions for employee retention credit restrictions (ERC), child tax credit expansion, reinstating R&E expenditure expensing, and restoring certain business tax breaks. It aims to offset added costs with savings from revised ERC deadlines and includes various enforcement measures against abuse. Key business provisions include Section 174 expensing for domestic R&E, extension of business interest limitation and bonus depreciation, and several other measures to support businesses, families, and low-income housing, with almost full offset from changes to the ERTC.  Following are some of the significant provisions contained in the Bill:

R&E Expensing

The Bill updates Section 174, postponing the start of the five-year amortization period for domestic R&E costs to after December 31, 2025. This adjustment allows for the immediate deduction of such costs incurred between December 31, 2021, and January 1, 2026.

Interest Limitation

The Bill modifies Section 163 business interest deduction limitation to maintain the method of calculating business interest deductions without depreciation, amortization, or depletion deductions through 2025.  Prior to 2022, the calculation of adjusted taxable income (ATI) for the limit on business interest deductions excluded deductions for depreciation, amortization, or depletion. The legislation proposes to extend this calculation method through 2025, allowing businesses to compute ATI without these deductions, effectively boosting the amount of interest they can deduct.

Bonus Depreciation

Additionally, the Bill extends the 100% bonus depreciation for eligible assets until 2026 and raises the Section 179 expensing limits, with adjustments for inflation post-2024.

Relief for US-Taiwan Double-taxation

The Bill proposes to mitigate double taxation for businesses operating between the U.S. and Taiwan, extending treaty-like benefits. It builds on a July 2023 discussion draft by key congressional committee leaders, offering relief to Taiwan's corporate taxpayers engaged in active business, a new criterion compared to the earlier proposal. Additionally, the bill supports the formation of a U.S.-Taiwan tax agreement to further alleviate double taxation, aligning with the goals of a similar Senate-approved bill from July 2023.

For the Tax Relief for American Families and Workers Act of 2024 to become law, it must pass the Senate and then be signed by the President. Given its strong bipartisan support in the House and backing from key Senate figures, the bill stands a good chance of passing. However, the outcome will depend on negotiations and potential amendments in the Senate. If it aligns with the priorities of both the Senate and the President, its enactment into law is likely, leading to significant tax policy changes.