Cha Eunwoo, 20 Billion Won in Taxes? ... "10 Billion Is the Cost of Lying, Trouble Sparked by Tax-Saving Attempt"

"Principal Tax Includes Penalties for Fraudulent Underreporting and Late Payment"

Amid allegations that singer and actor Cha Eunwoo is involved in a 20 billion won tax evasion case, experts have raised suspicions of intentional tax evasion based on changes in corporate structure and the designation of corporate addresses.

Actor Cha Eunwoo. Photo by Yonhap News

On January 25, attorney and accountant Kim Myungkyu analyzed the "Cha Eunwoo 20 Billion Won Tax Evasion" allegation in a post titled "A Friendly Explanation for Non-Experts" on social media.

Kim stated, "From the perspective of the general public, people might wonder, 'How much did he earn for the taxes alone to be 20 billion won?'" He explained, "This 20 billion won is not the original amount of tax (principal) that should have been paid. The figure appears to be the total of the principal tax (about 10 to 14 billion won), plus penalties for fraudulent underreporting and late payment surcharges."

He continued, "If the National Tax Service determines that you deliberately deceived them (fraudulent underreporting), they impose a penalty of 40% of the original tax due. On top of that, interest (late payment surcharge) is also added. In other words, out of the 20 billion won, 6 to 10 billion won is essentially the cost of lying," he explained.

"Investigation by the Fourth Bureau of the Seoul Regional Tax Office Indicates Strong Suspicion of Deliberate Tax Evasion"

Kim also mentioned that Cha Eunwoo underwent an intensive investigation by the Fourth Bureau of the Seoul Regional Tax Office on suspicion of tax evasion. He pointed out, "The involvement of the Fourth Bureau in this case is a strong signal that the National Tax Service views this not as a simple mistake, but as a case of highly intentional tax evasion."

Kim explained, "Many actors establish one-person agencies (corporations) to reduce their taxes, preferring to pay only corporate tax (10-20%) instead of income tax (45%)." He added, "It appears that Cha Eunwoo also attempted to use the tax-saving method commonly employed by actors (one-person agency), which led to this issue."

He continued, "However, for a corporation to be recognized, it must be a real company with employees and an office. If the office is registered as a parent’s eel restaurant or the actor’s own residence, the National Tax Service sees this and concludes, 'This is just personal income earned by the actor,' cancels the corporate tax benefits, and imposes a heavy penalty," he explained.

Actor Cha Eunwoo is hosting the welcome dinner for the 2025 Asia-Pacific Economic Cooperation (APEC) Summit held at Lahan Select Hotel in Gyeongju, Gyeongsangbuk-do on October 31 last year. Photo by Yonhap News Agency

Still Just Allegations... "If the Sole Purpose Was Tax Benefits Without Real Business, It Constitutes Tax Evasion"

Kim pointed out that tax-saving measures aimed solely at obtaining tax benefits without actual business activity can be considered tax evasion. He said, "The desire to receive benefits without incurring expenses has come back as a massive 20 billion won boomerang," emphasizing, "Even famous celebrities are not exempt when it comes to taxes. You must follow the rules."

He added, "If the investigation into Cha Eunwoo's case does not prove 'intent,' there remains a possibility that the matter will end with a simple collection of unpaid taxes. For now, it remains at the 'allegation' stage." However, he also pointed out, "Nonetheless, it is difficult to be optimistic, as there are concrete signs of meticulous planning, such as changing to a limited liability company to avoid external audits and registering the corporation at the eel restaurant in Ganghwa Island."

Previously, the Seoul Regional Tax Office notified Cha Eunwoo of an additional tax assessment amounting to over 20 billion won in income tax. This is the largest tax assessment ever imposed on an entertainer in Korea.

The National Tax Service reportedly determined that Cha Eunwoo entered into a false service contract between his agency Fantagio and Company A, which was established by his mother, Ms. Choi, to disperse income. This allowed him to avoid the maximum personal income tax rate of 45% and instead benefit from a corporate tax rate more than 20 percentage points lower. Company A, which is registered in Ganghwa Island, is suspected of being a "paper company" that did not provide actual management services.

Cha Eunwoo's agency, Fantagio, stated, "The main issue is whether the corporation in question is subject to substance-over-form taxation, and nothing has been finalized or officially notified yet." The agency added, "We will actively clarify our position regarding legal interpretation and application."