South Korea’s efforts to curb tax avoidance and undisclosed wealth transfers are facing fresh scrutiny after insurance records revealed that children as young as 7 were registered as business owners receiving salaries, including one teenager whose reported annual pay exceeded $155,000. The cases highlight potential gaps in income reporting and tax enforcement, offering a cautionary signal for investors and businesses monitoring regulatory risks in property-related transactions and family wealth transfers.
Records from the National Health Insurance Service showed that, as of July 31, 117 people under 18 were enrolled in workplace health insurance in Incheon, including 11 registered as business owners. The figures were disclosed on October 18 by Rep. Heo Jong-sik of the Democratic Party of Korea, who obtained the data from the agency.
The 11 minor business owners ranged in age from 7 to 16. Two were between 7 and 9, five were between 10 and 12, and four were between 13 and 16. The other 106 underage workplace insurance subscribers were at least 15, the minimum age for employment under South Korea’s general labor rules, subject to limited exceptions.
The youngest registered business owner, age 7, reported monthly compensation of about $1,180, with total compensation of roughly $12,000 for the previous year. The highest-paid, age 16, reported monthly compensation of approximately $12,700, equivalent to annual pay of about $156,000. By comparison, the average monthly compensation among the 106 minors who were not registered as business owners was about $720.
The records also showed multiple cases in which minors of different ages reported exactly the same compensation. Two business owners, ages 7 and 9, in real estate, leasing and business services each declared monthly compensation of about $1,180. A 12-year-old and a 15-year-old each reported monthly compensation of approximately $3,600 and annual compensation of about $45,000. Three others, ages 10 and 12, reported matching monthly compensation of roughly $1,150 and annual compensation of about $14,100. Two more, ages 11 and 13, reported identical monthly compensation of approximately $1,140 and annual compensation of about $14,000.
Real estate, leasing and business services accounted for eight of the 11 minor business owners, or 72.7%. The remaining three were registered in transportation, warehousing and communications. Six businesses were located in Namdong District, while Michuhol and Gyeyang districts each had two and Yeonsu District had one.
South Korean law permits minors to register businesses and serve as business owners. However, the concentration of young children in property-related businesses, combined with high reported compensation and repeated identical declarations, has raised concerns that some arrangements could be used to shift income among family members, lower tax liabilities or facilitate improper transfers of wealth.
Heo said that registering a minor as a business owner is not inherently illegal, but described the case of an elementary-school-age child receiving roughly $1,170 a month as the head of a real estate rental business as unusual. He urged the National Health Insurance Service, the National Tax Service and other authorities to coordinate their reviews to determine whether minor business owners are genuinely involved in management and whether their compensation reflects income shifting or improper wealth transfers.
The findings do not establish that any of the children or their families violated the law. But they underscore the challenge facing regulators as they seek to distinguish legitimate business arrangements from potential tax abuse, particularly in property-related activities where family ownership structures can complicate oversight.
