Unveiling Kabukicho’s Tax Evasion Network, From Receipt Trading to Cash Transactions, Every Possible Method Exploited

Incidents in Kabukicho often become news and are frequently discussed, especially regarding tax issues. Amid discussions, tax evasion becomes a topic. 

Compensated dating girl Lili-chan was re-prosecuted for evading about 40 million yen in taxes over two years, but how do people in Kabukicho view taxation?

“Well, wire transfers leave a trail.”

Ayumi (pseudonym, 21), who juggles both sugar dating and sex work, doesn’t pay taxes.

“When I was just starting college, my parents told me not to earn more than 1.03 million yen if I wanted to work part-time. I was worried about what to do when a friend invited me to work at a girls’ bar. They said it was okay because it’s cash in hand.

Then, at the girls’ bar, a coworker invited me to be a hostess, and I got hooked in no time. I earn over a million yen every month, but I spend it all. If there were wire transfers in sugar dating, I feel like I’d get caught somehow, so I always insist on cash.”

The National Tax Agency’s scrutiny of the nightlife industry is getting tougher. A few years ago, the tax agency investigated a major hostessing app company, leading to hostesses facing back taxes.

Some were even billed over 10 million yen in back taxes. Last year, the tax agency targeted the major host group A. Similarly, top earners faced back taxes in the tens of millions.

“Hosts might think they can’t trick the system because there are sales rankings and numbers like ‘over 10 million yen,’ but in reality, they would say things like ‘the sales were cancelled, so it didn’t actually count as income’ and cleverly evade it. But that’s only possible because of the culture around sales pushing. I wonder what will happen now.” (Masato, pseudonym, 23)

As a benefit of the sales pushing culture, hosts could manipulate their reported sales, and clients could adjust the dates on receipts between the day used for sales pushing and the day money was brought in. However, with the end of sales pushing and the dominance of card payments, this trick won’t work anymore.

“I used to give receipts for the amount spent by other girls who didn’t need receipts to girls who did. But now, there’s tighter control over that. If you’re a successful host with power, you can still have some freedom, though.” (Same source)

Some hosts file taxes as individual proprietors, while others have incorporated. Since hosts usually cover expenses when meeting clients outside, they often collect receipts from restaurants. Hosts who don’t ask for receipts might be more likely to evade taxes.

“Once, I got chewed out by a client for getting a receipt at a restaurant in front of them. They said, ‘That’s terrible! Dining with me is part of the job. You should deduct it as an expense. You’re so stingy. How low!’ 

I mean, maybe they’ve never paid taxes or just don’t understand society, but it’s basic to get receipts for meals or entertainment, and hosts who understand that concept and ask for receipts actually increase their likability.” (Same source)

After hearing this story, I thought, “Ah, so the hosts I request might not be very popular, but they’re getting receipts and filing taxes properly.” But in reality, I found out they weren’t even paying taxes, just selling off receipts to more successful seniors to make extra cash.

In Kabukicho, where money flows like water, maybe what’s needed now is to study taxes.

From the March 22, 2024 issue of FRIDAY