This article is part of our coverage of Cha Eunwoo’s Tax Evasion Scandal. You can read more and view the entire timeline here.
Cha Eunwoo, member of the group ASTRO and actor, has been notified by the National Tax Service (NTS) of a ₩20.0 billion KRW (about $13.7 million USD) tax supplement demand. A tax expert and former NTS investigator analyzed the background and key issues of the tax investigation.
Recently, the YouTube channel “CIRCLE 21” released a video about Cha Eunwoo’s tax controversy with Jeong Hae In, executive director of a tax firm and former NTS investigator.
Jeong pointed to the “difference in tax rates” as the core of the matter. He explained, “The highest personal income tax rate is about 50%, while the corporate tax rate is around 20%. From the NTS’s perspective, there is a structural question: ‘Why was income that should have been taxed at 50% routed through a corporation that paid only 20%?‘”
Jeong said that the key issue could be whether income earned from personal activities was recorded as sales of a family corporation or similar entities to reduce taxes.
In particular, Jeong noted that the tax investigation was conducted by the NTS Seoul Regional Tax Office’s Investigation Division 4, and he estimated the scale of Cha Eunwoo’s income.
He said, “Typically, individual entertainer investigations are handled by Investigation Division 2, in which most sales are under ₩100 billion KRW (about $68.4 million USD). If Investigation Division 4, known as the ‘reaper of the business world,’ is involved, then, although not definitively confirmed, Cha Eunwoo’s income might exceed ₩100 billion KRW (about $68.4 million USD).”
Jeong also pointed out the question of the corporation’s substantive existence. He said that if, based on the information, the corporation’s office and staffing show it to be a “shell company,” it could be interpreted as a means of tax evasion.
Furthermore, Jeong mentioned the possibility of a criminal complaint. “Investigation Division 4 basically investigates with prosecution in mind. If a criminal charge is filed and legally classified as tax evasion, the individual could become a convicted offender,” he stated.
Previously, Cha Eunwoo’s agency Fantagio responded to the controversy, saying, “This matter has not been finally confirmed or notified,” and that they “intend to actively clarify the issue through legal procedures concerning interpretation and application of the law.”
Cha Eunwoo himself stated on social media, “I am deeply reflecting on whether I was sufficiently strict in fulfilling my tax obligations. I will humbly accept the final judgment of the relevant authorities and take full responsibility for the outcome.“