Aftermath of Cha Eunwoo's 20 Billion KRW Tax Evasion Allegations: Advertising Industry Deletes and Hides Promotional Videos

Suspicions of Income Diversion Through Corporation Established by Mother
Shinhan Bank, Abib, and Others Make Promotional Materials Private
Companies Prioritize Brand Credibility
Stricter Standards Expected for Future Advertising Model Contracts

As Cha Eunwoo, a member of the group Astro and an actor, became embroiled in allegations of tax evasion amounting to around 20 billion KRW (approximately 20 billion won), concerns over model risk management are rising again, particularly in the advertising and financial sectors. As the controversy spreads, major companies are taking preemptive measures by removing promotional materials related to Cha Eunwoo, effectively distancing themselves from him.

According to industry sources on January 23, Shinhan Bank made all advertisement videos and images featuring Cha Eunwoo, which were posted on its YouTube channel and official social media the previous day, private.

Cha Eunwoo. The Asia Business Daily DB

Given the importance of brand credibility and ethics in the financial sector, this move is seen as a risk-minimizing measure, even though no legal judgment has been finalized. Previously, Shinhan Bank had selected Cha Eunwoo as a model to replace actor Kim Soohyun, after suspicions of an inappropriate relationship with a minor involving the late Kim Saeron surfaced. Industry experts suggest that, as model-related issues occur in succession, criteria for selecting advertising models in the financial sector may become even more conservative.

The beauty industry is also responding swiftly. The skincare brand Abib made private the Cha Eunwoo-featured video that had been released on its official YouTube channel, and deleted related images from its social networking services such as Instagram and X (formerly Twitter). Since Abib appointed Cha Eunwoo as its global ambassador in August last year, emphasizing a "transparent and trustworthy image," the current controversy is seen as a significant burden on the brand's overall image strategy.

Celebrity Tax Risks Realized... Industries Take Preemptive Action Amid Cha Eunwoo Controversy

The background of this incident is a large-scale tax issue surrounding Cha Eunwoo. According to reports, Cha Eunwoo underwent an intensive tax audit by the Seoul Regional Tax Office in the first half of last year, during which he was reportedly notified of an additional income tax assessment exceeding 20 billion KRW. This is an unusually large amount for an individual celebrity.

The National Tax Service is said to have determined that, after signing a management service contract with a corporation established by his mother, Cha Eunwoo distributed part of his personal income to the corporation, thereby benefiting from a relatively lower corporate tax rate. Reports indicate that Cha Eunwoo divided his entertainment earnings among his agency Fantagio, Corporation A established by his mother Choi, and his own personal account.

Shinhan Bank made all advertisement videos and images featuring Cha Eunwoo, which were posted on its YouTube channel and official social media the previous day, private. Shinhan Bank

Corporation A, at the center of the issue, reportedly once used the address of an eel restaurant operated by Cha Eunwoo's family in Ganghwa Island as its business location. Later, on December 23 last year, the address was changed to an office in Nonhyeon-dong, Gangnam-gu, Seoul, leading to speculation that the corporate structure was reorganized following the emergence of the tax evasion allegations.

The National Tax Service believes that Corporation A did not perform any actual services, and that Cha Eunwoo distributed income through a shell corporation to avoid the high personal income tax burden. Through this, he was able to apply a corporate tax rate more than 20 percentage points lower than the approximately 45% personal income tax rate, according to the tax authorities.

The business community sees this case not simply as a celebrity scandal, but as a representative example of "tax management risks for high-income sole proprietors and celebrities." A tax expert explained, "For individuals with large personal incomes, such as celebrities or sports stars, the use of corporations can be legal, but if it violates the substance-over-form principle, it can result in large-scale tax assessments. This also aligns with the National Tax Service's recent trend of intensifying tax audits on high-income celebrities."

Stronger Tax Audits on High-Income Celebrities? Advertising Industry on Alert Over Cha Eunwoo Case

The advertising industry is also closely monitoring the impact. With a series of incidents and scandals in the entertainment industry, advertising companies are increasingly reviewing not only clauses regarding criminal or social misconduct when signing model contracts, but also tax and financial risks. In particular, this case could lead to even stricter conditions for top-star model contracts in the future.

Fantagio, Cha Eunwoo's agency, stated in an official position, "We plan to actively clarify our position regarding the issues of legal interpretation and application through due process," adding, "Nothing has been finally confirmed or notified at this time." The agency further explained, "The main issue in this case is whether the corporation established by Cha Eunwoo's mother is subject to substantive taxation."

Meanwhile, Cha Eunwoo enlisted at the Army Training Center in Nonsan, South Chungcheong Province, on July 28 last year, and is currently serving in the Ministry of National Defense's Work Support Group. Since the controversy arose during his service period, there is speculation that the results of the investigation and legal decisions could affect the timing of his return to advertising and entertainment activities.