Tokyo Male Host Club Companies, Hosts Concealed About ¥2 Billion in Income from Taxation through False Reporting

The Yomiuri Shimbun

17:30 JST, October 31, 2024

The Tokyo Regional Taxation Bureau has found that nine companies that operate host clubs offering male companionship, and their hosts, concealed a total of about ¥2 billion in income, it has been learned.

The companies in Tokyo’s Kabukicho district and various other parts of the nation falsely reported fees for “usage of expertise” for a corporation in Micronesia, among other practices, according to sources. As a result of the investigations, the back taxes and penalties are believed to have reached about ¥200 million in corporation tax for the nine companies, and several hundred million yen in income tax for the hosts.

Host clubs have already become a social issue as some places have engaged in malicious practices by, for example, forcing female customers to rack up large debts. It has now been uncovered that some host clubs have been involved in tax evasion.

According to sources, one of the operators, FG, and its eight related companies, all of which are based in Shinjuku Ward, Tokyo, as well as their about 30 male hosts, were subject to the investigations.

The bureau began investigating the FG group around 2023. The eight companies had reported about ¥300 million as fees for “usage of expertise” paid to a Micronesia-based corporation of which the founder of FG is a representative. However, they didn’t actually pay this amount. The bureau has determined the companies recorded false expenses to reduce reported income.

The bureau has also concluded that FG recorded fictitious outsourcing expenses to conceal about ¥300 million in income, according to sources.

As most of the hosts did not file tax returns, with some of them having disposed of records of payments issued by the clubs, the bureau has uncovered a concealment of significantly more than ¥1 billion in income. Combined with approximately ¥600 million evaded by the nine companies, the amount of concealed income is believed to have totaled about ¥2 billion.

The companies and the hosts “did not intend to conceal income,” a lawyer representing FG told The Yomiuri Shimbun. “However, we eventually accepted the bureau’s findings. We will provide proper instructions to our hosts.”