South Korean singer-actor Cha Eun Woo has come under fire following a tax-related issue that is starting to tarnish his public image.
The ASTRO member is currently facing tax evasion allegations, with the National Tax Service (NTS) alleging that Cha may have a tax shortfall of 20 billion won.
Authorities are looking into the possibility that Cha is channeling his income as an entertainer through a company registered under his mother's name, allowing him to evade paying the correct amount of taxes.
Dispatch, the popular online entertainment media outlet in South Korea, has run a report containing the intricate details of the issue.
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A "PAPER COMPANY"
Reports said Cha may have benefited from a corporation called Cha's Gallery, which he established and was later managed by his mother.
Cha Gallery was reportedly founded by Cha after JC Group, the largest shareholder of Fantagio—the entertainment company and talent agency with which he was associated—ran into bankruptcy issues.
Although the Cha's Gallery claimed involvement in album production, management planning, production, and advertising, authorities determined that it lacked substantive business activity, making it a "paper company."
A “paper company” refers to a legally registered entity that exists only on paper, with no substantive operations or assets, and is often used for specific financial or legal purposes.
The National Tax Service (NTS) suspected that the company was used by the South Korean star to funnel his earnings into the corporation, enabling him to pay lower corporate tax rates rather than the higher personal income tax, which can reach up to 45 percent.
In addition to Cha's Gallery, Cha’s mother allegedly established another company, LNC, later rebranded as The Annie, which reportedly had an interest in managing Cha’s real estate properties.
Tax officials claimed that Cha's earnings were divided between his agency, Fantagio, the company registered under his mother's name, and the actor himself.
This effectively reduced his tax payments by more than 20 percentage points.
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Cha Eun Woo's response
In light of the controversy, Fantagio denied all the accusations hurled against its talent.
Cha is contesting the NTS findings by filing a pre-assessment review.
The company under his mother's name, stressed by Fantiago, is legitimate.
Lastly, the agency reminds the public that no judgment has been made regarding the controversy.
However, some brands have reportedly pulled out of working with Cha, whose memorable acting roles include Gangnam Beauty, True Beauty, and Wonderful World.
Shinhan Bank and skincare brand Abib have noticeably distanced themselves from the singer-actor by quietly removing or shelving advertising content.
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