On January 31st, a video titled ₩20 billion is not the end: Former NTS investigator explains the crux of Cha Eun-woo’s tax case was uploaded to the CIRCLE 21 YouTube channel. In the video, Jung Hae-in, former NTS investigator and current executive director of Jeong Hae-in Tax Firm, offered a detailed analysis of the controversy involving Cha Eun-woo.
According to Jung, the case centers on whether Cha Eun-woo declared his income as an individual subject to income tax or through a private company subject to corporate tax. “The difference between tax rates is significant, income tax can reach 50%, while corporate tax is around 20%” Jung explained. He added that the National Tax Service may have questioned why income that should have been taxed at a higher individual rate was instead processed through a corporate entity.
Jung further said that the company in question, founded by Cha Eun-woo’s mother, showed signs of being a paper company, citing no employees, unclear business activity, and an unusual registered address. “If this were a legitimate operating company, there would be staff, business operations and possibly more artists,” he said, arguing that the structure appeared designed primarily to reduce tax liability.
He also noted that tax authorities have been monitoring similar deals in the entertainment industry for several years, suggesting that Cha Eun-woo’s case has only gained widespread attention because of his high public profile. Jung described the matter as being in a gray area between tax avoidance and evasion, but stressed that if a company lacks substance, the case leans more towards evasion.
Addressing potential legal consequences, Jung warned that investigations handled by the NTS Fourth Bureau are generally conducted with criminal charges in mind. “If prosecutors determine this constitutes tax evasion, it could result in a criminal record,” he said, adding that cases involving amounts exceeding ₩3 billion could fall under aggravated punishment laws, potentially explaining why the case progressed to a high-level investigation.
Jung compared the situation to that of artists like Yoo Jae-suk, who reportedly emerged from previous tax audits without further investigation. “From a tax investigator’s perspective, minimizing long-term risk is more important than aggressively reducing taxes,” he said.
In particular, Jung criticized Cha Eun-woo’s public response. “If I were in his position, I would quickly admit guilt, apologize and accept responsibility.” he stated. “By hiring major law firms and litigating the case, the public perception becomes: ‘He committed tax evasion and he’s trying to deny it.’ This damages its image much more.
Cha Eun-woo was reportedly subjected to a high-intensity investigation by the Fourth Bureau of the Seoul Regional Tax Bureau last year, resulting in a notice demanding more than ₩20 billion in additional taxes, one of the largest sums ever imposed on an artist. Tax authorities allegedly determined that the company his mother founded operated as a shell company, allowing income to be taxed at a corporate rate about 20 percentage points lower than the individual income tax rate.
In response, Cha Eun-woo requested a formal review of the tax assessment through administrative procedures. His agency Fantagio said on January 22 that the case has not been concluded and depends on the company’s qualification as a legitimate taxable person, stressing that they will actively clarify the matter through legal channels.
Cha Eun-woo also addressed the controversy personally in a handwritten statement on January 26, explaining that his current military service was not an attempt to avoid scrutiny and pledging to fully cooperate with tax authorities. Fantagio later released a second statement urging the public to refrain from speculation until official conclusions are reached.
As the investigation continues, the case has sparked a broader debate about tax practices among top entertainers and the balance between legal tax planning, ethical responsibility and public trust.
Sources: Daum
