Singer and actor Cha Eun-woo has been engulfed in allegations of tax evasion totaling 20 billion won, the largest amount alleged among entertainers, and has appointed one of South Korea's top five law firms that includes a former Seoul Regional Tax Service commissioner as an adviser as his legal representative, setting the stage for tax-related disputes with the tax agency's Investigation Division 4, known as the National Tax Service's grim reaper.
On the 26th Cha Eun-woo posted an apology on his personal social media regarding the recent allegations of tax evasion amounting to around 20 billion won. In a long statement of his feelings he said "I am deeply reflecting on whether my approach to fulfilling my duty to pay taxes was sufficiently rigorous," and "I will sincerely participate in the tax-related procedures that follow. I will humbly accept the final judgments made by the relevant agencies and fulfill the responsibilities that follow."
However, Cha Eun-woo's practical response suggests he will mount the strongest possible legal rebuttal. That is because the legal representative he hired is the law firm Shin & Kim LLC, regarded as one of the country's top five law firms. Shin & Kim recently handled litigation for girl group NewJeans, raising its public profile.
Moreover, last year Shin & Kim invited a former Seoul Regional Tax Service commissioner as an adviser. He is also known to be a former member of the National Tax Service's Investigation Division 4, which conducted Cha Eun-woo's tax probe, leading to assessments that this amounts to de facto preferential treatment for former officials. Because that appointment was interpreted as strengthening Shin & Kim's capabilities in the field of taxes, Cha Eun-woo's side is expected to focus all efforts on interpreting the amount of additional tax assessed. In fact, Cha Eun-woo's side has filed a request for reconsideration of taxation to dispute the additional tax.
The tax agency's tax logic is also unlikely to crumble easily. Immediate public backlash has been strong because there are circumstances suggesting that the separate entity that received revenue from Cha Eun-woo's agency was a limited liability company registered in the name of a mother in Ganghwa-do, structured in a nonregulated real estate area with measures that appear intended to avoid external audits. With questions raised about what contribution a company with an address at an eel restaurant in Ganghwa-do made to any entertainment management business for Cha Eun-woo, critics argue there is strong intent.
Accumulated controversies over high-value tax evasion by entertainers operating through one-person agencies have also drawn attention. Last year actress Lee Ha-nee was notified of an additional tax assessment of around 6 billion won and argued differences in interpretation of the tax law but ultimately paid the roughly 6 billion won. Actor Yoo Yeon-seok was notified of an additional tax assessment of around 7 billion won but proved activities for one-person agency platforms such as YouTube through a reconsideration of taxation and had the amount reduced to the 3 billion won range; nevertheless, given the sense that it will be difficult to prove family corporate activities, it is predicted there will be no change to Cha Eun-woo's additional tax assessment of around 20 billion won.
Above all, Investigation Division 4, which conducted Cha Eun-woo's tax probe, is known for handling special nonroutine tax audits and is referred to as the National Tax Service's grim reaper. Because it has been known to handle heavyweight tax cases such as large corporations' inheritance tax and special audits, attention is focused on how it will wrap up the unprecedented tax evasion allegations against Cha Eun-woo.
[Photo] OSEN DB.
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