"Did Cha Eun-woo make 100 billion won?" Buzz grows...Expert says, "The 20 billion won bill is the price of lying"

[Financial News] Cha Eun-woo (29, legal name Lee Dong-min), an actor and former member of the group Astro, is facing allegations of evading 20 billion won in taxes. As the controversy grows, some are even estimating that his income may have reached 80–100 billion won.
Attorney and certified public accountant Kim Myung-gyu posted an article titled "A friendly explanation for non-experts" on his Threads account on the 23rd, in which he analyzed the "20 billion won tax evasion allegations" involving Cha Eun-woo.
Kim wrote, "The news about a famous celebrity facing a 20 billion won additional tax assessment is causing a stir. From an ordinary person’s perspective, the reaction is probably, 'Wow, how much did he earn if the tax alone is 20 billion won?'" He said he would break down the issue from the standpoint of a professional who works as both an attorney and an accountant.
Kim explained, "This 20 billion won is not all the tax he originally should have paid, the base tax. Roughly speaking, the base tax would be about 10–14 billion won, and the rest is a 'penalty' (additional tax)." He continued, "If the National Tax Service (NTS) concludes, 'You deliberately deceived us'—that is, finds fraudulent underreporting—it can impose an additional tax of 40% of the original tax due. On top of that, interest for late payment is added. In other words, 6–10 billion won out of the 20 billion won is effectively the price of lying."



Kim also addressed the fact that last spring Cha Eun-woo underwent an intensive investigation by the 4th Investigation Bureau of the Seoul Regional Tax Office over suspected tax evasion.
He interpreted this by saying, "The involvement of the 4th Investigation Bureau of the Seoul Regional Tax Office in this case is a strong signal that the NTS sees this not as a simple mistake, but as a very serious suspicion of intentional tax evasion."
He went on, "Actors often set up one-person agencies as corporations to reduce their taxes. They want to pay only corporate tax of around 10–20% instead of income tax of 45%. But for a corporation to be recognized, it has to be a real company. It needs employees and an office, yet some register it under a family member’s name and list their parents’ eel restaurant or their own residence as the office. When the NTS looks at it, they think, 'This is just a shell. It’s really just the actor personally earning the income,' and then they revoke the corporate tax benefits and hit them with a massive income tax bill."
Kim concluded, "Everyone wants to save on taxes. But if you don’t want to spend money on things like hiring staff and running an office to give the business real substance, and you only want to cherry-pick the tax benefits, that’s exactly what turns into tax evasion," adding, "That greed has come back as a huge boomerang worth 20 billion won."



Kim then added another post on the 24th. He wrote, "One of the key reasons the NTS could not help but suspect that Cha Eun-woo deliberately tried to deceive them is that a perfectly normal joint-stock company was converted into a Limited Liability Company (LLC)," explaining, "No matter how much money an LLC makes, it is not required to undergo an external audit."
However, he also noted, "It’s not as if the 4th Investigation Bureau is always right," and stressed, "The allegation that Cha Eun-woo evaded 20 billion won in taxes is still at the level of an allegation."
He added, "If intent cannot be proven, there is still a possibility that this could end with a simple additional tax assessment," but cautioned, "Even so, it is hard to be optimistic because there are too many concrete traces of meticulous planning. It looks less like a simple mistake and more like a structured, premeditated setup involving experts."
Finally, Kim said, "The core issue in this case is not 'how much more tax he pays,' but whether 'intentional concealment can be proven.'" He added, "If these arrangements are recognized as intentional tax evasion, this could lead not only to a record-breaking additional tax bill, but also to a criminal complaint being filed with prosecutors."
Previously, the 4th Investigation Bureau of the Seoul Regional Tax Office conducted an intensive tax audit of Cha Eun-woo last year and notified him of an additional income tax assessment exceeding 20 billion won. The NTS believes that Cha Eun-woo attempted to avoid the high 45% income tax rate and instead benefit from a corporate tax rate in the 20% range by diverting his income to a corporation established by his mother, identified as Ms. Choi. The NTS concluded that this company was essentially a paper company that did not actually provide services.
Some observers, noting that the additional assessment alone amounts to 20 billion won, have estimated that Cha Eun-woo’s income during the audit period may have been in the range of 80–100 billion won. They arrived at this figure by reverse-calculating based on the 20 billion won in tax already paid and the 20 billion won in additional tax, and the applicable tax rates.
Cha Eun-woo’s agency stated, "The key issue in this case is whether the corporation established by Cha Eun-woo’s mother should, in substance, be treated as the actual taxpayer," adding, "Nothing has been finally determined or officially notified yet, and we plan to actively present our position through the proper legal procedures regarding the interpretation and application of the law."
 


moon@fnnews.com Moon Young-jin Reporter