As singer and actor Cha Eun-woo has been embroiled in suspicions of tax evasion worth about 20 billion won through a corporation established by his mother, broadcaster Yu Jae-seok's so-called "radical taxpaying method" is drawing attention again.
Fantagio, Cha Eun-woo's agency, issued an official statement on the 22nd, saying, "The key issue in this case is whether the corporation established by Cha Eun-woo's mother is subject to substantive taxation," adding, "This is not a matter that has been finally confirmed or notified, and we plan to actively explain the issues related to legal interpretation and application through due process." It added, "We will faithfully cooperate so that the procedure can be concluded as soon as possible."
As the controversy spread, the case of a tax audit of national MC Yu Jae-seok is being revisited. In a 2024 tax audit, Yu Jae-seok was found to have no signs of intentional income omission or tax evasion, and his filings were also assessed as faithful.
Tax accountant Yun Na-gyeom explained the typical tax filing methods of entertainers in a video titled "Yu Jae-seok, who didn't get caught even in a tax audit: a shocking taxpaying method," released on the YouTube channel "Tax-saving TV" in Aug. last year.
According to Yun, entertainers are mostly classified as sole proprietors, and there are broadly two ways to file income. The first is bookkeeping-based filing, in which a tax accountant organizes all income and expenditure and reflects expenses as much as possible to reduce taxes. The second is estimated filing applying the standard expense rate. This method does not require separate preparation of supporting documents, but the tax burden can be relatively higher.
Yun said, "Most entertainers try to save on taxes through bookkeeping," but added, "Mr. Yu Jae-seok chose estimated filing applying the standard expense rate."
Citing a concrete example, he said, "Assuming one earns an annual income of 10 billion won and actual expenses are 4 billion won, the tax base for bookkeeping filing would be 6 billion won and the tax would be about 2.7 billion won," adding, "But if only the standard expense rate of 8.8% is applied, the tax base rises to 9.12 billion won, and the tax due amounts to about 4.1 billion won."
Regarding why Yu Jae-seok chose this method, Yun analyzed, "It appears to have been a choice to fundamentally block tax controversies and maintain public trust," adding, "It seems to be a strategy to focus on broadcasting activities rather than spending energy on complex tax processing."
He added, "Entertainers fear tax audits because the scope covers the entire books for the past five years and every transaction detail and supporting document is reviewed one by one," explaining, "If documentation is insufficient, not only is additional tax collected, but an additional tax is also imposed."
In general, there are not a few cases where people reduce reported income by treating personal expenditure as business expenses or by hiring family members and paying them salaries. In contrast, Yu Jae-seok reportedly reflected little of such expenses and filed using only the standard expense rate, leaving virtually nothing to take issue with during the tax audit. In addition, he paid the non-bookkeeping additional tax associated with estimated filing, and thus passed even a high-intensity tax audit without difficulty.
Yun said, "This is not a method suitable for everyone, but Mr. Yu Jae-seok is a very exceptional case who chose trust over short-term tax savings," adding, "Faithfully paying taxes is something to be proud of."
Earlier, Cha Eun-woo was reportedly notified by the National Tax Service of additional tax collection exceeding 20 billion won on charges including income tax evasion. This is among the highest levels of additional collection ever imposed on an entertainer.