"Is the Mother's Company Just a Shell?" Cha Eun-woo Faces Controversy Over Huge Tax Penalty
Cha Eun-woo, a member of the group ASTRO and a top actor, is facing a tax penalty amounting to over 2 billion won. His agency has stated that they are clarifying legal issues, but the National Tax Service's judgment is reportedly firm.
According to related industry sources on the 22nd, the Seoul Regional Tax Office's Investigation Bureau 4 conducted a rigorous tax audit on Cha Eun-woo last year. As a result, the National Tax Service notified Cha Eun-woo of an additional tax penalty exceeding 20 billion won for income tax and other taxes. Currently, Cha Eun-woo's side has filed for a pre-tax review in objection to this.
The key issue in this case is whether there was 'income distribution using a family corporation'. Cha Eun-woo has been distributing his entertainment income through Company A, which is represented by his mother, and his agency Fantagio. This appears to be a tax-saving strategy to apply the lower corporate tax rate (up to 24%) instead of the personal income tax rate (up to 45%).
However, the National Tax Service has classified Company A as a 'paper company' that does not provide substantial services. They have determined that income that should essentially belong to Cha Eun-woo personally was funneled through a shell corporation to reduce taxes.
The fallout has also affected his agency, Fantagio. The National Tax Service has imposed an additional tax penalty of 8.2 billion won on Fantagio for allegedly issuing false tax invoices to Company A.
As the controversy spread, Fantagio issued an official statement saying, "The substantive tax liability of the company established by Cha Eun-woo's mother is the issue," and added, "This matter is not yet finalized, and we are diligently clarifying it through proper procedures." They also stated, "The artist and the tax representative will cooperate to finalize the process and will faithfully fulfill their tax obligations."
As Cha Eun-woo, who has received public love for his upright image, faces this '20 billion won tax risk', all eyes in and out of the entertainment industry are on the National Tax Service's final judgment.
