Smilegate, a game company known as Lost Ark, has been caught violating accounting standards and is on the verge of throwing out additional taxes on taxes that have not been properly collected. The amount of additional taxes is estimated at several billion won to up to 10 billion won.
According to the "Chosun Biz" on July 22, Smilegate was punished by the Securities and Futures Commission (SFC) on July 17 for violating accounting standards due to negligence.
The SFC concluded that the issue of Smilegate's violation of accounting standards would require a correction of financial statements and a correction of sales for each financial year.
Smilegate is said to have to receive data from China Tencent, a major source of sales, to count its sales, and the fact that the data was delayed to the next fiscal year has become a problem.
Smilegate, a Korean game company established in 2002, has been producing games using popular IPs such as "Lost Arc," "Crossfire," "Tales Runner" and "Epic Seven."
In the 2014-2017 fiscal year, when the problem of imputation was raised, the company recorded sales worth 600 billion won per year on a consolidated basis and sales exceeded 700 billion won at the end of last year.
In response, a Smilegate official told Global Economics that it has not yet been informed of the official results from the committee and that action will be taken as soon as the results are made. "We've been working with Tencent for years, but there's no particular problem," he said.