Actor Cha Eun-woo has reportedly received the largest tax reassessment in entertainment history, while Yu Jae-seok, who had nothing to hide, is being reexamined.
On the 22nd, a media outlet reported that Cha Eun-woo was notified by the National Tax Service of a tax reassessment exceeding 20 billion won for alleged tax evasion such as income tax.
According to the report, the National Tax Service took issue with Cha Eun-woo's income structure, saying that after Cha Eun-woo's mother established B corporation and the agency Fantagio signed a service contract, revenue was divided and distributed to Fantagio, B corporation and Cha Eun-woo personally. The National Tax Service judged B corporation to be effectively a paper company that did not provide actual services, and saw Cha Eun-woo and his mother as using a nonexistent B corporation to receive the lower corporate tax rate—more than 20% lower than the income tax rate—in order to reduce income tax by up to 45%, calling it a scheme.
In response, Cha Eun-woo's side said, "Whether the company established by Cha Eun-woo's mother is subject to substantive taxation is the main issue," and "This matter has not been finally confirmed or notified. We will actively explain issues related to the interpretation and application of the law through proper procedures. We will faithfully cooperate so that the procedures can be completed promptly."
The 20 billion won reassessed against Cha Eun-woo is reported to be the largest in entertainment history. In particular, because it was reported that the tax investigation result notice containing these details was sent after waiting until enlistment was completed at Cha Eun-woo's request, allegations of preferential treatment and draft evasion have also surfaced.
The reason Yu Jae-seok is being reexamined as Cha Eun-woo shocked the public with the largest tax reassessment in entertainment history is that despite undergoing a high-intensity tax audit in 2024, no errors or allegations related to tax filings were found. Yu Jae-seok is known to have no intentional tax omissions or tax evasion and to file taxes faithfully.
Regarding this, the YouTube channel "JeolseTV" said, "Entertainers are usually classified as sole proprietors and can choose one of two methods: bookkeeping reporting or estimated reporting, known as the standard expense ratio reporting," highlighting Yu Jae-seok's tax payment method.
Bookkeeping reporting is a method in which a tax accountant organizes all income and expenses and handles expense processing to maximize tax savings, creating books and filing them. Expense ratio reporting (estimated reporting) applies a government-set ratio; there is no need to collect supporting documents but it can result in paying more tax. The tax accountant said, "Most entertainers choose the bookkeeping method to try to pay as little tax as possible, but in Yu Jae-seok's case he filed using the standard expense ratio estimated reporting. Assuming an annual salary of 10 billion won, subtracting 4 billion won in expenses leaves 6 billion won, and under bookkeeping reporting the payable tax is about 2.7 billion won. If the standard expense ratio of 8.8% like Yu Jae-seok is applied, the taxable base is 9.12 billion won. Then the tax to be paid would be 4.1 billion won. Some people pay 2.7 billion won and some pay 4.1 billion won, and the difference is as much as 1.4 billion won," he said.
The tax accountant cited image and the handling process as the reasons Yu Jae-seok chose the method that results in paying as much as 1.4 billion won more. The tax accountant said, "It is a way to fundamentally block tax controversies, maintaining trust in himself while ensuring long-term income," and, "He can focus on broadcasting activities without the stress of collecting supporting documents when handling taxes. There is no worry about reassessments or additional tax. Risk zero," and analyzed, "Because he gave up expense processing there is nothing to investigate and nothing more to find. From the tax accountant's point of view, there is nothing more to collect and refunds may even be due. Yu Jae-seok's method is not right for everyone, but from a long-term perspective it seems he chose lifetime trust over immediate tax savings."
Meanwhile, Cha Eun-woo enlisted last July and is serving in the army band. He is scheduled to appear in Netflix's The Wonder Fools later this year.
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