Cha Eun Woo‘s one-person agency recently bought land worth about 2.85 billion won ($2 million) in Ganghwa County amid ongoing claims of tax evasion amounting to 20 billion won ($13 million).
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On March 8th, MBC’s investigative program Exploration Planning Straight reported on Cha Eun Woo, who is accused of evading 20 billion won in taxes through his one-person agency.
Lawyer Kim Myung Gyu said, “We can assume the National Tax Service has already found major issues. This shows it’s not just a mistake, but active tax evasion.”
Cha Eun Woo has been ordered by the National Tax Service to pay about 20 billion won in back taxes, the largest amount ever for a celebrity. The NTS found that Cha had avoided income tax by using a company registered under his mother’s name.
Cha Eun Woo, who is currently serving in the military, addressed the issue on social media, saying, “I sincerely apologize for causing concern and disappointment. This has made me reflect on my responsibilities as a citizen of Korea, and I am deeply sorry.”
However, he disagreed with the NTS’s decision and hired a law firm to request a review of the case. He is currently waiting for the results.
Exploration Planning Straight‘s team visited a grilled eel restaurant in Incheon, where Cha’s one-person agency is based. A nearby resident said, “They had a big sign saying it’s a restaurant often visited by celebrities. It was demolished for remodeling about six months ago,” and mentioned that there were no signs of an entertainment agency.
Cha’s Gallery, the company Cha Eun Woo set up in 2019, is a family-run business. His mother is the CEO, with Cha and his sibling as directors, and his father as the auditor.
For highly-paid celebrities, paying income through their agency leads to a higher tax rate of up to 49.5%, including local taxes. However, using a one-person company lowers the tax rate to around 27.5%, depending on profits.
Exploration Planning Straight reported, “Cha Eun Woo’s income is estimated in the tens of billions of won. A tax rate reduction of more than 20 percentage points could save him tens of billions of won in taxes every year.” They also added, “The tax burden could be further reduced by saving profits in the company or using them as business expenses or salaries for family members registered as employees.”
The program also pointed out that while using a one-person company to settle income isn’t illegal, if the company isn’t actually engaged in entertainment management work, it could be seen as a way to avoid higher taxes.
Exploration Planning Straight also reported, “In July 2020, Cha’s company bought a building with a grilled eel restaurant, its land, and nearby woodland. The total area was 14,973 square meters (about 4,500 pyeong), and it cost 1.75 billion won ($1.2 million), with 800 million won ($535,260) financed by a loan under the company’s name.”
They added, “In February, the company bought more land (2,069 square meters, about 1,230 pyeong) right in front of the restaurant for 1.1 billion won ($736,000). Despite buying land the size of three soccer fields, it’s unclear what business activities are taking place at the site.”
Cha’s Gallery later changed its name and became a limited liability company. Exploration Planning Straight explained, “Unlike a stock corporation, limited liability companies don’t have to disclose or audit their finances, making it hard to know if more real estate was purchased or if expenses were properly reported.”
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Cha Eun Woo’s agency, Fantagio, said, “Cha’s mother has been handling management duties and supporting his entertainment activities.” They added, “We are taking the necessary steps to receive a fair judgment based on supporting documents.”
>> Cha Eun Woo’s ‘The WONDERfools’ Set for May Release on Netflix Despite Tax Controversy
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The post Cha Eun Woo’s Agency Spends $2 Million on Massive 4.6-Acre Plot on Ganghwa Island appeared first on Premier Korean Entertainment Magazine.
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