"Cha Eun-woo's 13 Billion Won Tax Payment Is Not a Loophole" — Current Accountant Says It Was a "Normal Payment Following Procedure"

[The Financial News] An active singer and actor, Cha Eun-woo, who was previously embroiled in a tax evasion controversy, recently paid taxes totaling more than 10 billion won. A practicing accountant has argued that this was not a late payment, but a response made through the normal tax appeal process.
On the 9th, lawyer and certified public accountant Kim Myung-gyu wrote on his social networking service (SNS), "The amount Cha Eun-woo paid appears to be around 13 billion won based on his actual tax burden. This is not a late payment, but a normal payment made in accordance with procedure," expressing his view on Cha Eun-woo's tax payment.
According to this analysis, Cha Eun-woo's side filed a "Judgment on Propriety before Tax Levying" to challenge the legality of the assessment before the formal tax notice was issued. After that review was completed, they paid the tax in line with the official notice.
Kim explained, "If you do not pay after the formal notice is issued, you may incur an additional charge for delayed payment," adding, "To reduce the burden of additional tax, it is common practice to first pay the tax and then contest it through a Tax Appeal or administrative litigation."
His agency Fantagio also explained the scale of the payment in an official statement on the 9th. Fantagio said, "In line with the National Tax Service (NTS) refund procedures, part of the amount will be adjusted, and the actual tax burden is expected to be around 13 billion won," and added, "Now that his individual income tax has been fully paid, a refund process will proceed for the portions of corporate tax and Value-added tax (VAT) that were double-taxed."
On January 22, reports emerged that the National Tax Service (NTS) had notified Cha Eun-woo of an additional income tax assessment exceeding 20 billion won, which sparked allegations of tax evasion.
The NTS is reported to have concluded that Fantagio, Cha Eun-woo's agency, entered into a management service contract with a corporation established by Cha's mother in order to apply the lower corporate tax rate instead of the personal income tax rate, which can be as high as 45 percent. On that basis, the agency was hit with a back tax assessment.
As the controversy grew, Cha Eun-woo said at the time, "I feel deeply sorry," and pledged, "I will faithfully comply with the tax-related procedures going forward." He also stated, "I will humbly accept the final decision made by the relevant authorities and take full responsibility in accordance with the outcome."
About two months later, on the 8th, Cha Eun-woo once again posted an apology on his Instagram, saying, "I respect the procedures and results of the National Tax Service (NTS), and I have paid all related taxes so that no further confusion will continue."
bng@fnnews.com Kim Hee-sun Reporter