Cha Eunwoo Faces Possibility of Criminal Charges Over Alleged 20 Billion Won Tax Evasion

"Special Act applies to tax evasion exceeding 1 billion won
Life imprisonment or at least five years in prison"

Singer and actor Cha Eunwoo has become embroiled in controversy over alleged tax evasion amounting to 20 billion won, and the possibility of criminal prosecution is also being discussed.

Singer and actor Cha Eunwoo. Cha Eunwoo Instagram

On January 27, accountant and lawyer Kim Myungkyu appeared on YTN Radio's "Wise Radio Life" and explained, "Even if the additional taxes have been paid, if the National Tax Service determines it to be malicious tax evasion, criminal proceedings may begin."

He stated, "There is a standard of 1 billion won per year for the amount illicitly obtained for tax purposes. If that threshold is exceeded, the Act on the Aggravated Punishment of Specific Economic Crimes, commonly known as the Special Act, applies. Once this law is applied, the statutory sentence is either life imprisonment or a minimum of five years in prison."

He continued, "A significant legal issue arises here: under the law, only sentences of three years or less are eligible for probation. In principle, if the Special Act is applied and the amount illicitly obtained exceeds 1 billion won per year, the minimum statutory sentence is five years. This does not meet the requirements for probation, so there is a possibility of imprisonment."

It is reported that Cha Eunwoo has retained the major law firm Sejong and is preparing a legal response to the National Tax Service's notice of additional tax. Regarding this, attorney Kim said, "If the entire additional tax is paid and a sincere attitude of remorse is shown, the judge may grant discretionary mitigation and reduce the minimum statutory sentence of five years by half. In that case, the sentence would be reduced to two years and six months, which falls within the range eligible for probation."

He added, "In conclusion, unless all the money is paid and a very earnest apology is made, it will be difficult to avoid a prison sentence. I believe this is why a major law firm has been retained."

Previously, the Seoul Regional Tax Office notified Cha Eunwoo of an additional income tax of approximately 20 billion won. This is the largest tax penalty ever imposed on an entertainer.

The National Tax Service is reported to have determined that Cha Eunwoo, his agency Fantagio, and Company A, established by his mother Ms. Choi, entered into a fake service contract to disperse income. It is alleged that, in order to avoid the top individual income tax rate of up to 45 percent, they applied a corporate tax rate that is more than 20 percentage points lower than the income tax rate. Company A, which is registered in Ganghwa-do, is suspected of being a "paper company" that did not actually provide management services.

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

Cha Eunwoo also personally addressed the tax evasion allegations. On January 27, through his social media, he said, "I will faithfully participate in the upcoming tax-related procedures. I will humbly accept the final decision made by the relevant authorities and take full responsibility for the outcome."