Singer and actor Cha Eun-woo of the boy group ASTRO has been informed by South Korea’s National Tax Service (NTS) of a tax assessment exceeding KRW 20 billion, related to alleged tax evasion. The amount is reportedly one of the largest ever imposed on a celebrity. The warning stems from the findings of a tax audit conducted before Cha joined the military in July last year. Cha’s side has filed a pre-assessment review request, formally contesting the NTS’s decision, and is currently awaiting the outcome.
According to an exclusive report, Cha was subjected to an in-depth investigation by the Investigation Division 4 of the Seoul Regional Tax Bureau last spring. The alleged scheme mirrors recent cases involving celebrities accused of reducing taxes through so-called “individual agencies.” In such arrangements, an artist or family member forms a separate corporation that signs service contracts with the original management agency, allowing income to be split and taxed at a lower corporate rate rather than a higher personal income tax rate.
In Cha’s case, authorities allege that a company founded by his mother was inserted between Cha and his Fantagio agency. Fantagio reportedly entered into a service contract with the company run by his mother to support Cha’s entertainment activities, after which the income from Cha’s work was distributed between Fantagio, the company, and Cha himself. The NTS concluded that the company provided no substantive services and operated as a paper entity, allegedly created to reduce income tax liabilities that could be as high as 45%, shifting profits to a corporate tax rate more than 20 percentage points lower.
Tax industry sources said the company’s registered address was located in a location incompatible with entertainment operations and lacked a functional office. Although the charges would be processed through luxury vehicles owned by the company, investigators would find no evidence of distinct services separate from Fantagio’s role. As a result, the NTS refused to recognize the company’s legitimacy, leading to repercussions for both Cha and Fantagio. Fantagio was reportedly hit with a KRW8.2 billion tax assessment last August after authorities determined that it had processed fake tax invoices linked to the company. Fantagio’s appeal reportedly did not change the outcome.
Following separate interrogations of Cha and his mother, the NTS concluded that the financial benefits accrued through the company ultimately reverted to Cha, determining that more than KRW 20 billion in income taxes had gone unpaid. At Cha’s request, the NTS reportedly waited for military enlistment procedures to be completed before issuing the final audit notice.
Cha’s representatives maintain his innocence, maintaining that the company was founded out of concern for stability amid frequent changes in Fantagio’s leadership and to personally manage its businesses. They insist that the company was not a shell company but a duly registered cultural and entertainment management company. If the pre-assessment review is accepted, the tax notice may be withdrawn. If rejected, Cha would be required to pay the assessed amount, although further legal avenues, such as appealing to the Tax Court, would remain available. His team is also reportedly considering bypassing the current review to file a direct appeal.
It also emerged that Cha was not the original target of the investigation. The investigation reportedly began with alleged tax issues involving Namgoong Gyeon, president of Mirae ING and owner of Fantagio. As investigators looked into a group of companies linked to Namgoong Gyeon, the company run by Cha’s mother linked to Cha reportedly surfaced, causing the investigation to expand and eventually include the star.
Sources: Daum
