‘Demon Slayer’ studio head blames awful working conditions for breaking tax laws

Following the sentencing of animation studio Ufotable president Hikaru Kondo earlier this month, the Japanese news site Daily Shinchō detailed the company founder’s statements on why he committed tax evasion.

“We always end up in the red,” Kondo said of the studio’s work on popular projects. Since it was founded in 2000, Ufotable has worked on hit shows like Fate/Zero, God Eater, and most recently the hit adaptation of Demon slayer: Kimetsu no Yaiba.

Crunchyroll first reported Kondo’s statements in English:

If our works do not become a hit…we will not be able to pay our staff salaries or recoup the production costs. I wanted to reserve a sufficient amount of cash so that I wouldn’t have to worry about working capital in case something happened.

In an industry that relies on freelance labor, shirking the costs of healthcare and other benefits and the stability of a salary, Kondo moved to make as much of his staff full-time, salaried workers as possible. Besides labor costs, he said according to the Daily Shinchō report “The base production costs have been gradually increasing, but that doesn’t mean that the money coming from the client side has changed.”

The period in which Kondo broke tax law was somewhat ironically followed by the record-shattering box office success of Demon Slayer: Kimetsu no Yaiba – The Movie: Mugen Train.

“The quality demanded of anime keeps increasing,” Kondo said, “but because the production costs offered by the clients are relatively low, every time we produce a work, we always end up in the red.”

Kondo’s sentence — 20 months in prison — was suspended for three years, according to Anime News Network’s reporting on the case. Kondo could avoid serving time, based on his behavior for the time period. He was found guilty of (and admitted to) breaking the Corporation Tax Act and Consumption Tax Act, withholding income from merchandise and cafes from 2015 to 2018, according to another ANN story. The exact amount withheld and owed has varied in reporting, though Anime News Network reports the Tokyo District Court’s preliminary hearing in September cited ¥138 million in unpaid taxes.