Tax scandals among South Korean celebrities are more than just legal problems, they also affect their reputation and popularity. And at the center of the storm right now is the country's popular singer and actor Cha Eun-woo. The member of the popular K-pop band Astro is being investigated by South Korea's National Tax Service (NTS) for alleged tax evasion of around 200 billion won ($13.7 million). He has not yet been charged with a criminal offense, but the controversy has already caused a major blow to the advertising market, with several companies canceling contracts with him.
The country's tax office claims that Cha Eun-woor's entertainment income was shown through a company registered in her mother's name
. Investigators believe that these companies were used to show corporate income instead of personal income on income tax returns, in order to reduce the tax rate. Personal income tax in Korea can reach a maximum of 45 percent, while corporate taxes are relatively low.
The NTS says that the company in question did not have any real business activities. It only existed on paper. That is why, according to their calculations, more than 20 billion won in taxes were underpaid.
Cha Eun-woo’s official agency Fantagio has come under suspicion
. Tax officials allege that her personal income was split into three categories—Fantagio, a company registered in her mother’s name, and Cha Eun-woo herself. According to authorities, this income distribution was cleverly structured, reducing her total tax rate by more than 20 percent.
If the tax office’s assessment holds up, legal experts believe the actual income involved in the case could be more than 100 billion won. As such, it could become one of the biggest legal controversies involving a single entertainment star in South Korea.
Although the commercial impact
has not been settled legally, its impact has been felt quickly. Several major companies, such as Shinhan Bank and cosmetics brand Abib, have quietly removed Cha Eun-woo's advertisements. And the popular South Korean health care brand Bodyfriend is reportedly renegotiating its contract with her, according to media reports. The tax complications have sparked public debate about the star, according to media reports. So, no one wants to take business risks in this situation.
Allegations denied, legal challenge
Meanwhile, Cha Eun-woo's agency Fantagio has denied all allegations. They say that the company is a legitimate organization in the name of Cha Eun-woo's mother. The company also said that it is preparing to take legal action in this regard. On the other hand, Cha Eun-woo is currently undergoing mandatory military training, so he has no opportunity to make any public
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