Cha Eunwoo, a member of the group ASTRO and an actor, is said to owe ₩20.0 billion KRW (about $13.8 million USD) in taxes after being accused of tax evasion by the National Tax Service. It has now been revealed that he has hired a major law firm.
According to SPOTV News on the 26th, Cha Eunwoo has retained Sejong, a major law firm, and is preparing legal proceedings against the tax office’s assessment. Sejong previously handled the lawsuit regarding the exclusive contract termination for the group NewJeans.
The Seoul Regional National Tax Service Investigation Division 4 conducted a high-intensity investigation last year on allegations that Cha Eunwoo evaded taxes through a one-person agency established by his mother and notified him of a ₩20.0 billion KRW (about $13.8 million USD) income tax levy. This is the largest amount of tax ever levied on a celebrity.
Cha Eunwoo has been active through service contracts supporting entertainment activities between his agency Fantagio and a corporation established by his mother. The income earned by Cha Eunwoo was distributed among Fantagio, his mother’s corporation, and Cha Eunwoo himself.
The National Tax Service judged that although Cha Eunwoo’s mother’s corporation signed the service contract, it was essentially a paper company that did not provide actual services to Fantagio or Cha Eunwoo. They believe that Cha Eunwoo and his mother created the corporation and distributed income to reduce their income tax by up to 45% as individuals, applying a corporate tax rate about 20 percentage points lower than the personal income tax rate.
Cha Eunwoo’s side has filed a tax objection review (a pre-rights relief procedure allowing taxpayers to request correction by reviewing the legality of notification). Fantagio also stated, “The main issue in this matter is whether the corporation established by Cha Eunwoo’s mother is subject to substantive taxation. This issue has not been finally confirmed or notified, and we plan to actively explain through proper procedures regarding the legal interpretation and application issues.”
Cha Eunwoo has hired a major law firm and is receiving legal assistance. It is expected that they will focus on proving that the corporation established by his mother is not a paper company but a company that actually provided services.
Fantagio, the agency that was fined ₩8.20 billion KRW (about $5.67 million USD) in additional taxes due to this issue, also retained another major law firm, Yulchon. The National Tax Service imposed the fine after determining that Fantagio handled false tax invoices for Cha Eunwoo’s mother’s corporation. Though Fantagio filed a tax objection review against this, the National Tax Service rejected it.
Fantagio responded to SPOTV News regarding the law firm’s retention with “Unable to confirm.”
Cha Eunwoo enlisted in July last year and is currently serving in the military band on active duty. He has not yet commented on the tax evasion allegations.