"200 billion won tax evasion allegation" lawyer says about Cha Eun-woo that "he could not have done it without the help of his current agency."
Recently, the 'Knowing Lawyer' channel uploaded a video titled "The crisis of Cha Eun-woo, a genius in many ways."
Earlier, Cha Eun-woo underwent an intensive investigation by the Seoul Regional Tax Service's Investigation Division 4 on tax evasion charges in July last year before his enlistment, and was notified of a tax bill exceeding 200 billion won. This is the largest amount of tax assessed against an entertainer to date.
The tax authority judged that company A, established by Cha Eun-woo's mother, had signed a service contract with his current agency Fantagio but was a paper company that did not provide substantial services. In fact, company A's address turned out to be an eel restaurant located on Ganghwa Island, making it somewhat difficult to handle entertainment-related work. It was reported that the authorities believe Cha Eun-woo and his mother set up the non-substantive company A and distributed income to reduce income tax of up to 45%, thereby improperly applying a corporate tax rate more than 20 percentage points lower than the personal income tax rate. The tax authority also viewed the tax invoices Fantagio received from company A as false tax invoices and imposed 8.2 billion won in taxes. After being notified of a tax bill exceeding 200 billion won, Cha Eun-woo's side objected to the tax authority's decision and is awaiting the pre-assessment review result.
Attorney Lee Ji-hoon, referring to the claims of Cha Eun-woo's mother about company A, gave his expert opinion: "Even calling it a paper company, it is a properly registered business. It follows procedures and does paperwork to be formally registered. However, there is form but no substance. Saying it's a formally registered business rather than a paper company, none of this has been refuted."
Cha Eun-woo's mother explained, "As the agency's representatives changed several times, she felt anxious about her son's entertainment activities and, with the intention to protect him, directly ran the management business," adding, "company A is not a paper company but a formally registered business."
Attorney Lee Ji-hoon also said, "You have to say what was done to support his entertainment activities. You have to explain that for it not to be a paper company. My understanding from some reports was that the mother ran an eel restaurant, but others say that is not the case. I think Cha Eun-woo probably doesn't know much either; this is speculation," and added, "I thought maybe Fantagio told them they could reduce taxes and created this structure. Fantagio would know. It is a legitimate company of considerable size, not a small firm. It is a management company of one of the country's largest comprehensive entertainment firms. It is in Gangnam District and a big company. 'If company A did nothing, would they give it money?' I don't understand. But I speculate that rather than Cha Eun-woo or his mother designing it, Fantagio may have designed it."
According to the lawyer, the two main issues are whether company A had the capacity to support entertainment activities and what it actually did.
Attorney Lee Ji-hoon said, "It seems company A, whose address is on Ganghwa Island, will have to explain to the tax authority what it did (to support Cha Eun-woo's entertainment activities)," adding, "Of course Cha Eun-woo and his mother probably knew, but without Fantagio's help they couldn't have done it. Fantagio is in the middle between the two. Unless Fantagio was completely deceived or Fantagio helped, this could not have happened. Because Fantagio is the party that settles accounts, 'Would they give money to a company that did no work?' That makes no sense. I suspect Fantagio played some role," he predicted from an expert perspective.
Originally the tax authority's investigation targeted the agency Fantagio, but during the process company A associated with Cha Eun-woo was detected, sparking controversy. As a result, Fantagio was notified of 8.2 billion won and company A, including Cha Eun-woo, was notified of 200 billion won in tax assessments. It is reported that Cha Eun-woo has retained Sejong, one of Korea's five major full-service law firms, and Fantagio has also retained the large law firm YulChon to respond.<
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