Cha Eun-woo had been subjected to a high-intensity probe by the National Tax Service’s Seoul Regional Office in early 2025. Photo: Cha Eun-woo/Instagram
K-pop idol Cha Eun-woo’s tax case has drawn attention not only for the record 20 billion won (RM55.04mil) levy, but for red flags that have raised questions about possible intentional misconduct, triggering a sharp shift in public sentiment towards the once untarnished South Korean actor-singer.
Public reaction to the 28-year-old star’s delayed apology on Jan 26 – coupled with his decision to retain a top law firm while sidestepping key allegations – has intensified scrutiny and signalled that reputational fallout may rival the financial penalty itself.
“I sincerely bow my head and apologise for the recent events that have caused concern and disappointment to many of you,” he wrote in Korean on social media. “This incident has led me to reflect deeply on whether I have been sufficiently rigorous in fulfilling my tax obligations as a citizen of the Republic of Korea.”
Cha, who is serving in South Korea’s military service, said he wrote the post after completing his daily duties in the military.
“Although I am currently serving in the military, this was by no means a deliberate choice to avoid this controversy,” he wrote. “I was unable to postpone my military enlistment any longer last year, so I enlisted while the tax investigation process was not completed.”
Cha also apologised to the fans who have been supporting him and partners who have worked with him in the past 11 years.
“Going forward, I will diligently cooperate with any tax-related procedures in the future,” he wrote. “Furthermore, I will humbly accept the final decision made by the relevant authorities and fulfill my corresponding responsibilities.”
As the tax investigation unfolds, here is a breakdown of the key facts and findings so far.
The case first surfaced after South Korean media reported that Cha had been subjected to a high-intensity probe by the National Tax Service’s (NTS) Seoul Regional Office in early 2025. The investigation resulted in a 20 billion won additional tax assessment, including unpaid base tax and penalty components, tied to a management company owned by Cha’s mother.
The family-owned entity was reportedly identified during a routine inspection of Fantagio, the agency that manages Cha and his K-pop boy band Astro. Authorities flagged the income structure after discovering that Cha’s earnings were split among Fantagio, Cha himself and his mother’s company, an arrangement seen as atypical for contracted entertainers.
Questions deepened after the company’s registered address was revealed to be an eel restaurant on Incheon’s Ganghwa Island owned by Cha’s parents.
Following the tax scandal, online users also resurfaced past posts showing Cha visiting the restaurant, which the business later used for promotional purposes, adding public scrutiny to the relationship between Cha, the restaurant and the company.
At 20 billion won, the assessment marks an unprecedented tax levy on a South Korean celebrity and stands out even by global standards.
Media reports note that only a handful of international stars have faced larger cases, led by Chinese actress Fan Bingbing’s 883mil yuan (RM497.66mil) payment in 2018, followed by Portuguese football star Cristiano Ronaldo’s €16.8mil (RM78.9mil) settlement the same year.
The contrast is even more stark in South Korea.
Before Cha, the largest entertainment-related tax case involved actor Jang Geun-suk’s mother, who paid about 5 billion won and received a suspended prison sentence in a similar structure-based tax case. That precedent has raised concerns that Cha and his family could face heavier penalties, including possible jail terms, if intent is ultimately established.
The size of the tax bill has also fuelled questions about Cha’s underlying earnings. While exact figures have not been disclosed, reports estimate that Cha generated at least 80 billion won (RM219.89mil)in income between 2022 and 2024, shared among Cha himself, his mother’s company and Fantagio.
It is not uncommon for high-earning celebrities to set up corporate entities to lower their tax burden. In South Korea, personal income is taxed at rates of up to 45% at the top bracket, while corporate tax rates are capped at about 20%.
Tax efficiency, however, is not the same as tax evasion, experts say.
“Everyone wants to minimise taxes. But if you try to take only the tax benefits without bearing the costs of running a real business, such as hiring staff or operating an office, that crosses the line into tax evasion,” Seoul-based lawyer and accountant Kim Myung-kyu wrote on social media.
That distinction is why the family-owned entity’s registration at an eel restaurant drew scrutiny, according to tax accountant Moon Bora.
“It’s hard to believe that a small eel restaurant could manage a major star like Cha Eun-woo. The gap between the type of business and the location is simply too large,” she said on her YouTube channel.
Experts also point to the company’s legal restructuring in 2024 – when it converted from a corporation into a limited liability company at the same time it relocated to the eel restaurant – as a critical red flag.
“Unlike corporations, limited liability companies are not subject to public disclosure requirements or mandatory external audits,” Moon said. “That shift would have raised suspicions at the tax agency, signalling an attempt to avoid regulatory oversight rather than a simple effort at tax efficiency.”
The deployment of the Seoul tax office’s Investigation Bureau 4 has placed Cha’s case under heightened scrutiny, as the unit rarely targets individual entertainers.
Often described as the agency’s elite enforcement arm – and nicknamed the “corporate death reaper” for its hardline probes – Bureau 4 is not tied to a specific taxpayer category.
“It’s mobilised when authorities judge a case to involve complex structures, unusually large sums or atypical evasion patterns,” said a tax industry official familiar with the NTS’ internal organisation.
“While the bureau primarily handles corporate investigations, it can step in when a case is deemed significant enough. Even so, direct involvement in a celebrity tax case remains unusual.”
Kim said the bureau’s involvement adds to the weight of potential deliberate behaviour by Cha’s side.
“The deployment of the Bureau 4 is a strong signal that the tax agency sees this not as a simple mistake, but as a case of suspected deliberate tax evasion.”
Speculation has also surfaced that Cha timed his military enlistment to step out of the public spotlight as the tax case unfolded, after reports showed he requested the tax agency to send the audit results notice after entering service in July 2025.
Fantagio rejected the claim, saying Cha enlisted because he could no longer delay his mandatory service.
“The core issue is whether the company established by his mother qualifies as a substantive tax entity, and the case has not been finalised,” the agency said, adding it would address legal interpretation issues through formal procedures. Cha has about a year remaining in his military service.
Cha has bolstered his legal defence by hiring Shin & Kim LLC, one of South Korea’s top-tier law firms, and has formally challenged the tax agency’s assessment through a pre-review request.
If authorities conclude the structure involved active manipulation, the case could escalate into criminal tax evasion.
Under South Korean law, evaded taxes exceeding 1 billion won can carry a minimum five-year prison sentence or life imprisonment, with suspended terms generally unavailable above three years.
While aggravated penalties appear unlikely at this stage, liability would still hinge on whether intent is established.
“Even indirect or constructive intent can be sufficient under tax law,” said a tax expert who requested anonymity. “Cha remains the final beneficiary and signatory to key agreements.” – The Korea Herald/Asia News Network
