In response to the controversy over singer and actor Cha Eun-woo's alleged tax reassessment in the 20 billion won range, the Korea Taxpayers Federation urged careful judgment, saying that the presumption of innocence must be upheld.
On the 29th, the Korea Taxpayers Federation distributed a press release titled "10 unsettling truths revealed through the Cha Eun-woo tax investigation," and said, "Labeling someone as a tax evader solely because taxes were reassessed infringes on the rights of taxpayers." The Korea Taxpayers Federation is the only citizen group in Korea specializing in taxes that operates to protect taxpayers' rights and interests.
The federation said, "Tax avoidance is a taxpayer's right, and if tax avoidance succeeds it becomes 'tax planning,' but if it fails it becomes 'tax evasion,'" adding, "It is often difficult to determine the illegality of such acts until the Supreme Court's ruling." It added, "The U.S. Supreme Court also recognizes a taxpayer's right to seek legally to reduce taxes with the help of tax professionals."
The federation also raised concerns about media reports that definitively labeled the corporation registered in Cha Eun-woo's mother's name as a 'paper company.' The federation said, "To label a corporation as a paper company while appeal and litigation procedures are ongoing violates the presumption of innocence," and warned, "Media reporting may form prejudgment and risk infringing on taxpayers' rights and interests."
They also mentioned allegations of leakage of tax information. The federation said, "Leakage of tax information is a clear illegal act," and argued, "If the commissioner of the National Tax Service neglects to investigate whether information was leaked and stands by, that could constitute dereliction of duty. The agency should identify those involved through an internal audit and punish them severely and without mercy."
They said, "The formula 'taxes were reassessed = deserving of criticism' does not hold," and emphasized, "It is the National Tax Service that should be criticized for creating tax laws that even experts find difficult to understand and for not providing sufficient prior guidance." They strongly criticized, "Branding someone as a tax evader based solely on a simple reassessment is a reputational killing born of ignorance."
Earlier, Cha Eun-woo became embroiled in controversy after it was reported that he had been notified by the Seoul Regional Tax Service's Investigation Division 4 of an income tax reassessment of about 20 billion won. The National Tax Service is reported to have concluded that Cha Eun-woo entered into a service contract with his mother's corporation to avoid high personal income tax rates and thus was subject to corporate tax rates. When the past address of that corporation was confirmed to be an eel restaurant in Ganghwa County, Incheon, suspicions were also raised that it was a 'paper company' with no substantial business activity.
In fact, Ganghwa County Office recently conducted an on-site inspection of the corporation and reports said no facilities that looked like office space were found. However, the corporation is known to have transferred its address to Gangnam District, Seoul, on the day of the inspection.
In response, Cha Eun-woo's side has maintained that the corporation is a legitimately registered management company that has performed substantive functions and roles. His agency, Fantagio, said, "The matter currently raised is at the stage where facts are being verified according to tax authorities' procedures," and added, "If legal and administrative judgments become clear in the future, we will responsibly take necessary measures in accordance with those results."
Cha Eun-woo also said, "I will faithfully comply with tax-related procedures," and added, "I will humbly accept the final determination of the relevant agencies and fulfill my responsibilities according to the outcome."
[Photo] OSEN DB
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