Could Cha Eun-Woo Go To Jail? As ASTRO Member's Tax Evasion Case Deepens, Here's What Korea's Laws Suggest

Cha Eun-Woo's alleged tax evasion case seems to be taking a toll on the Korean star's public and professional image. After a skincare brand removed his videos from endorsements, and some more companies hinted at the advertising industry distancing itself, the ASTRO member now seems to have triggered the legal community who have weighed in to give insight on his case, and the repercussions he could face. The National Tax Service recently accused him of large-scale tax evasion amounting to over 20 billion KRW (about $13.7 million). Suspicion arose around his one-person agency registered in the name of his mother, after officials claimed it was aimed at reducing income taxes. Eun-Woo, who will soon be seen in Netflix show The Wonderfools, is currently

away serving his mandatory military service.

Will Cha Eun-Woo face imprisonment?

While Eun-Woo is currently under investigation, his agency Fantagio strongly rejected the allegation. The singer-actor is now awaiting the outcome of a pre-assessment review requested to challenge the National Tax Service's ruling.

Meanwhile, legal experts discussed the possible circumstances the idol-actor could face if found guilty. In a report by Koreaboo, the matter first needs to be classified. If the case falls under "tax evasion," the investigation needs to prove that the one-man agency owned by his mother was established with the primary purpose to funnel his income.

Lawyer clarifies Eun-Woo's case

In a YouTube video, a lawyer from Nova Law Firm, Lee Don-Ho, discussed whether the agency actually provided services to the idol, whether or not it conducted business with offices, employees, and actual work. The money it generated would become Eun-Woo's personal income and would be taxed if the investigation showed that it was generated from his work as an artist and image. Until and unless the contract between Eun-Woo and the company was valid and declared that it fulfilled any business duties, using a corporation does not automatically constitute tax evasion.

On the other hand, if Eun-Woo's case falls under contradicting interpretations of tax laws resulting in underreporting, it would become "tax avoidance." This would exempt the singer from criminal charges. All Eun-Woo would need to do is clear the unpaid due, that's 20.0 billion KRW (about $13.8 million) in taxes. If he submits the amount, there would be no trial. In that case, Eun-Woo would join other celebs like Song Hye-Kyo and Honey Lee who faced similar "tax avoidance" and were asked to pay all due taxes.

Parents' Eel restaurant and paper company

Soon after news of Eun-Woo's alleged tax evasion surfaced, netizens started connecting dots between the "paper-company" registered in the name of his mother, and the Eel restaurant the idol frequently visits and even promotes through his social media. Several online forums and communities came out with photos and addresses of the dining place, which turns out to be located at the same address as his mother's company. Many now wonder if the two businesses located at Ganghwa-gun, Incheon are the same.Under such "one-person" agency, despite being signed to an official entertainment agency, the celebrity or their family establishes a separate company that signs a service contract with the main agency, allowing income to be redistributed in a way that lowers tax liability.