[theqoo] CHA EUNWOO, SUSPECTED OF TAX EVASION THROUGH HIS 'MOTHER'S COMPANY'... 20 BILLION WON IN FINES

Cha Eunwoo, a singer and actor who is a member of the boy group ASTRO, has been notified by the National Tax Service (NTS) that he must pay more than 20 billion won ($13M USD) in additional taxes for alleged tax evasion, including income tax. This is one of the largest additional tax assessments ever imposed on an entertainer. The notice is the result of a tax audit conducted before Cha enlisted in the military in July last year. Cha’s side has filed an objection to the NTS decision and is currently awaiting the outcome of a “pre-assessment tax review” requested prior to formal taxation.

According to an exclusive report by Edaily on the 22nd, Cha underwent an intensive investigation last spring by the 4th Investigation Bureau of the Seoul Regional Tax Office on suspicion of tax evasion.

The tax evasion allegations raised against Cha follow a structure similar to the “one-person agency” tax avoidance schemes recently alleged against several other celebrities. In this method, despite having an original management agency, the celebrity or their family sets up a separate company, signs a service contract with the agency, and lowers taxes through questionable means.

In Cha Eun-woo’s case, an entity referred to as Company A, established by his mother, Ms. Choi, was inserted between Cha and his agency, Fantagio. Fantagio and Company A entered into a service contract for supporting Cha’s entertainment activities. From that point on, income earned by Cha was divided among Fantagio, Company A, and Cha himself.

However, the NTS determined that Company A was a “paper company” that did not actually provide services. The tax authorities concluded that Cha and his mother established Company A, which lacked real substance, in order to reduce income tax, normally as high as 45%, by distributing income and applying the corporate tax rate, which is more than 20 percentage points lower.

A source in the tax industry said, “Company A’s address was located somewhere in Ganghwa Island, in a place that didn’t seem suitable for entertainment-related work and could hardly be considered an office,” adding, “Although several imported cars were registered under Company A’s name and various expenses were processed, there are claims that it did not provide any services distinct from Fantagio.”

As the NTS refused to recognize the substance of Company A, which connected Fantagio and Cha, the repercussions spread to both parties. This is also why Fantagio was hit with an additional tax assessment of 8.2 billion won by the Seoul Regional Tax Office in August last year. The NTS regarded Fantagio as having processed “false tax invoices” issued by Company A and imposed additional taxes, including value-added tax. Fantagio’s own pre-assessment tax review request did not change the outcome.

In addition, after summoning and investigating both Ms. Choi and Cha, the NTS concluded that the profits accumulated by Company A ultimately went to Cha, Ms. Choi’s son, and that Cha had failed to pay more than 20 billion won in income tax. At Cha’s request, the NTS reportedly waited until his military enlistment was completed before sending the official notice of the tax audit results.

Cha’s side maintains that the decision is unfair. After receiving the notice, they requested a pre-assessment tax review to challenge the appropriateness of the NTS’s decision. Cha’s representatives stated, “As Fantagio’s CEO changed several times, Cha’s mother felt anxious about her son’s entertainment activities and wanted to protect him, so she established a company and directly operated a management business,” adding, “This is not a paper company without substance, but a formally registered popular culture and arts planning business.”

If the pre-assessment tax review is accepted, Cha will not have to pay the taxes; if it is rejected, he must pay according to the tax notice. If rejected, he may continue disputing the assessment by choosing one of the following: filing an appeal with the NTS, petitioning the Tax Tribunal, or requesting an audit from the Board of Audit and Inspection. Cha’s side is also considering withdrawing the pre-assessment review request and proceeding directly to the Tax Tribunal.

Meanwhile, the original target of the 4th Investigation Bureau of the Seoul Regional Tax Office, known for handling major tax evasion cases, was not Cha Eunwoo. The investigation reportedly began with suspicions of tax evasion involving Namgung Gyeon, chairman of Mirae I&G, which owns Fantagio. While conducting planned investigations into tax evasion through stock manipulation, the bureau’s radar reportedly picked up Chairman Namgung, who has been known as an “M&A expert.”

The bureau investigated Mirae I&G, Fantagio, Humasis, Billions, and other companies effectively owned by Chairman Namgung as a single group. During this process, Company A, which had transactions with Fantagio, was uncovered “like a trailing vine,” becoming part of the investigation, which eventually expanded to include Cha.

source: https://n.news.naver.com/article/018/0006205295?sid=101

original post: here

1. And he's so rich himself...

2. No but how much money does he own to evade 20 billion won in taxes...

3. 20 billion...?

4. 20 billion won in tax evasion is unprecedented

5. Meanwhile he's already earning so much ㅋㅋ

6. Isn't this crazy?

7. 20 billion is the highest amount of tax evasion we've seen no? That's crazy

8. Just how much money does he own?

9. Huh? And there's no explanation for it? We need to stop making paper companies

10. Just how much does he earn...?