Experts weigh in on if Cha Eun Woo may face criminal charges for tax evasion

Legal and financial experts have weighed in on whether or not singer/actor Cha Eun Woo (given name Lee Dong Min) may face criminal charges for tax evasion. 

According to Sports Seoul on January 24 KST, the core issue at hand in Cha Eun Woo's ongoing tax evasion scandal is whether or not the situation is a case of "tax evasion" or "tax avoidance". 

Based on information disclosed by the National Tax Service regarding Cha Eun Woo's case thus far, the star is facing allegations of deliberate and planned "tax evasion", using a "paper company" to subject a portion of his earnings to corporate tax, rather than individual tax. 

For such a case to be categorized as tax evasion, it must be proven that an individual deliberately engaged in "fraudulent practices" to "evade paying full tax amounts". One way to prove this would be to find evidence that close family members, who fulfilled no substantial business duties, nonetheless received salaries at a "paper company", thus attesting to the fact that the "paper company" was not a real business company. As of now, although more evidence is needed, the National Tax Service seemed to suspect Cha Eun Woo and his family of knowingly engaging in "fraudulent practices", based on the registered address of Cha Eun Woo's one-man agency as well as the agency's corporate structure adjustment from corporation to LLC. 

If found to be a serious case of "tax evasion", Cha Eun Woo may face criminal charges at court. Current South Korean laws state that an individual found to have evaded over 1 billion KRW in taxes may face 5 or more years in prison. However, typically for first time offenders, such sentences are deferring for a specific period of time, as was the case of actor Jang Geun Suk's mother in 2024, whose 2.5 year prison sentence was deferred by a probationary period of 4-years. 

However, if found to be a case of "tax avoidance" rather than "tax evasion", Cha Eun Woo will be ordered to pay all unpaid taxes as well as additional taxes for failure to report and pay all due taxes in time. In this case, no prosecution or trial is necessary so long as the individual complies with the taxed amount. Actress Song Hye Kyo previously faced a similar issue of "tax avoidance" after failing to report certain financial statements. Most recently, actress Honey Lee also faced "tax avoidance" allegations and was ordered to pay all due unpaid taxes. 

Therefore, experts believe that the heart of this ongoing issue is whether or not Cha Eun Woo "failed to pay his taxes in full", due to certain errors or misinterpretations of tax laws; or if he deliberately "planned and implemented strategies" to "deceive the government and evade payments." 

In the case of the former, the National Tax Service would simply require Cha Eun Woo to pay 20 billion KRW (~ 13.6 million USD). In the case of the latter, Cha Eun Woo may face a criminal trial.