Korea Taxpayers Association defends star Cha Eun-woo
Published Jan 30, 2026 02:04 pm
Korean star Cha Eun-woo and the logo of Korea's National Tax Service (Instagram, NTS' Facebook page)
The Korea Taxpayers Association (KTA) has defended Korean star Cha Eun-woo, who is facing a 20-billion won (about $13.6 million) tax surcharge that is being labeled as tax evasion.
Korea's National Tax Service (NTS) imposed the surcharge on Cha Eun-woo after an investigation stemming from the establishment of a corporation by the star's mother.
Cha Eun-woo is signed under the Fantagio agency. His mother's corporation signed a service agreement with Fantagio.
The association issued a "10 Inconvenient Truths About Tax Audits," outlining Cha Eun-woo’s tax case.
It said reports of alleged tax evasion by Cha Eun-woo "unilaterally accusing him of tax evasion simply because he was levied taxes" only views taxes through the lens of state power.
The association said tax avoidance is a taxpayer’s right. Tax avoidance is a legal process of minimizing tax while tax evasion is using illegal means to avoid paying tax.
“The US Supreme Court has ruled that ‘a taxpayer's legal right to reduce or avoid taxes imposed on him or her within the limits permitted by law is never in question.’ Tax avoidance, where a taxpayer seeks to minimize his or her tax liability with the assistance of a tax professional, is both legal and a taxpayer's right,” the association said.
Korean star Cha Eun-woo (Instagram)
In addition, it said the transaction form chosen by the taxpayer cannot be arbitrarily denied.
“The Supreme Court has ruled that ‘a taxpayer may choose among various transaction forms or legal relationships to achieve the same economic objective, and the tax authority must respect this unless there are special circumstances. The tax authority cannot arbitrarily deny the transaction form chosen by the taxpayer simply because it reduces the tax burden,’” it explained.
The group said Korea’s National Tax Service (NTS) “cannot arbitrarily deny the fact that Mr. Cha Eun-woo established a corporation in his mother's name to reduce his personal income tax. However, if the corporation lacks any human or physical facilities, or if it adopts a form that is disjointed from the substance of the transaction solely to evade tax burden without any other economic purpose, the transaction can be denied.”
The NTS said the corporation set up by Cha Eun-woo’s mother is a “paper company,” established to avoid paying taxes.
According to the association, saying a company is a “paper company” violates the presumption of innocence.
“If the corporation registered under Cha Eun-woo's mother's name was a so-called "paper company" with no personnel or physical facilities, or if it issued tax invoices without providing services, this would constitute receiving false tax invoices and could be subject to criminal punishment,” the KTA said.
It cited the case of a fried chicken restaurant in which the NTS determined that the son’s company was a “paper company” with no personnel or physical facilities and filed a complaint.
“While the first trial found the defendant guilty, the Supreme Court ultimately acquitted the defendant. As such, the Supreme Court is very strict in determining whether a company is a paper company,” the KTA said.
“The fundamental principle of criminal law, ‘It is better to let 100 criminals go free than to inflict a single injustice upon a single innocent person,’ must be upheld,” it said.
The KTA also said leaking tax information is illegal, citing a law.
“Information related to celebrity tax audits would be difficult to report without a tax official leaking the information. Nevertheless, the Commissioner of the National Tax Service's inaction on the leak constitutes dereliction of duty. The National Tax Service must conduct rigorous internal audits to identify and punish officials responsible for leaking tax information,” it said.
It added that the equation “taxes assessed = condemnation” does not hold true.
“Many of the reasons for tax assessments are unintentional tax evasion due to differences between corporate and tax accounting, such as differences in the timing of profit and loss attribution, simple mistakes, or complex tax laws and frequent revisions. Unlike intentional tax evasion, these are not subject to criticism,” it said.
It added, “Instead, the National Tax Service should be criticized for creating tax laws that are difficult even for experts to understand and failing to provide adequate advance notice. Taxpayers who successfully appeal or file tax lawsuits after tax assessments reach 30-40 percent. Accusing tax evaders simply because they were subject to a back pay is an act of honor killing based on ignorance.”
It said the excessive surcharges in South Korea promote tax delinquency, saying, “In a situation where it's difficult to even pay the original tax owed for years, excessive surcharges are a major cause of delinquency. The 2024 25.3% delinquency rate for high-income business owners further demonstrates this.”
The KTA also said high levels of tax evasion among high-income earners are due to an unfair tax system and low trust in the government.
“Tax evasion is influenced not only by tax rates but also by welfare levels, the fairness and transparency of the tax system, and trust in the government. Countries with high levels of government trust tend to have lower levels of tax evasion,” it said.
In Korea, it said, the marginal income tax rate reaches 49.5 percent for income exceeding one billion won, reaching 54 percent when health insurance premiums are included. This is similar to Sweden, but welfare benefits and government trust are relatively low. As a result, high-income earners perceive the tax system as unfair, reinforcing tax evasion.
The KTA branded the reward system for tax collection as encouraging excessive tax collection.
“The system where individuals who receive rewards for excessive taxation and then lose in the Supreme Court are not required to return them is a systemic problem. Tax officials are required to collect only the ‘statutory amount, not excessive taxes,’ and the performance-based reward system undermines objectivity,” it said.
In addition, it said that “if an investigation is conducted without a justification for a tax audit, the full amount of the tax evasion must be canceled.”
“The Supreme Court has consistently ruled that even if tax evasion is discovered during an investigation without a justification for a tax audit, the full amount of the tax evasion must be canceled if due process is violated. Despite this, the National Tax Service often fails to adequately explain the reasons for the investigation,” it said.
The KTA said “the reason wealthy Koreans are afraid of tax audits is because of excessive penalties.”
“In Korea, intentional tax evasion can result in life imprisonment, while in Sweden, the maximum penalty is six years.
“We punish criminals to ensure they receive the full punishment they deserve and return to society, leading to fulfilling their duties. Excessive punishments drive criminals to death, denying them the opportunity for rehabilitation, and play a significant role in Korea's highest suicide rate,” it said.
Cha Eun-woo’s side is appealing the NTS decision.