Everything is still at the speculation level.
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As ASTRO member Cha Eunwoo‘s tax evasion scandal continues to spark criticism and concern, legal experts have weighed in on the possible circumstances the idol-actor could face if he is found guilty.
ASTRO’s Cha Eunwoo
The heart of the issue, as per the experts, lies in the classification of Eunwoo’s case — whether it will be concluded as “tax evasion” or “tax avoidance.” To prove the former, it has to be proven that the one-man agency owned by Cha Eunwoo’s mother was set up with the sole intention of funneling his income.
Lee Don Ho, a representative lawyer at Nova Law Firm, recently discussed Cha Eunwoo’s case in a YouTube video, explaining the circumstances at length. The first issue to look at, Lee elaborated, is whether the agency actually conducted any business. Even if the company has offices, employees, and actual work, it ultimately would boil down to whether it actually provided any services to the idol. If it turns out that its reported income was generated solely through Eunwoo’s labor and image, the money could still be taxed as personal income.
Lee, however, made it clear that simply using a corporation doesn’t automatically constitute tax evasion. It would require a comprehensive review of whether the contract structure between the idol and the company was valid and whether the company fulfilled any business duties.
Under the current tax laws of Korea, if the amount of evaded tax exceeds ₩1.00 billion KRW (about $691,000 USD), the Act on Aggravated Punishment of Specific Crimes may be applied to sentence the individual to prison, with a term of five years to a lifetime. Typically, for first-time offenders, such prison terms are deferred for a specific period of time.
However, if the case is concluded as underreporting due to differing interpretations of tax laws, constituting “tax avoidance,” then the individual would be exempt from criminal penalties. In this instance, Cha Eunwoo will be ordered to pay all unpaid due taxes, which is reported to be ₩20.0 billion KRW (about $13.8 million USD). This would eliminate any trial, so long as the idol complies with the taxed amount. Recently, celebrities like Song Hye Kyo and Honey Lee also faced similar “tax avoidance” issues and had to pay all unpaid taxes to resolve the matter.