Actor and singer Cha Eun-woo was notified of an income tax reassessment in the 20 billion won range, and experts say the likelihood of it leading to criminal punishment is low.
Tax accountant Lim Soojung appeared on CBS Radio's Park Seong-tae's News Show on the 27th and identified the key issue in this case as the "existence of the family corporation." She explained, "A company established in Cha Eun-woo's mother's name entered into a service contract with the agency Fantagio and distributed revenue, and whether this company conducted substantial business activities will be the most important criterion."
Lim, the tax accountant, said, "Establishing a corporation in itself is not illegal, but if it only existed on paper without personnel or physical facilities and was used to reduce tax burden, that is problematic," and added, "The National Tax Service viewed that the real beneficiary was Cha Eun-woo personally and that income was distributed using the corporation, and taxed accordingly."
She also noted that the fact the company's registered address was an eel restaurant on Ganghwa Island in Incheon, which caused controversy, "makes it hard to see it as a typical management company," but she added, "However, if it is proven that the company actually provided services, it is difficult to conclude it was illegal."
She took a cautious stance on the possibility of criminal punishment. Lim said, "If it is judged to be tax evasion, there is a possibility of criminal punishment, but based on the circumstances known so far, the likelihood of it going to an actual criminal trial does not appear high."
However, some in the legal community are paying attention to the possibility of applying the Act on the Aggravated Punishment of Specific Crimes, given that the National Tax Service's assessed additional tax reaches the 20 billion won range. Under the act, if evaded tax amounts to 1 billion won or more per year, life imprisonment or imprisonment for five years or more may be imposed, so the conclusion of this case may depend on the legality of the taxation and whether the corporation is recognized as a real entity.
Earlier, the National Tax Service reportedly notified Cha Eun-woo of an income tax reassessment of about 20 billion won. Tax authorities judged that the company established by Cha Eun-woo's mother was used as a means to distribute income without substantive business activity and carried out a high-intensity tax investigation.
Currently serving in the military, Cha Eun-woo recently said, "I will humbly accept the final judgment of the relevant authorities and fulfill my responsibilities," and added, "I am reflecting on my tax obligations." His agency Fantagio also said, "We are confirming the facts according to the tax authorities' procedures and are cooperating faithfully with the investigation."
[Photo] OSEN DB
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