Tax Planning or Tax Evasion?: The Controversy Surrounding Cha Eun-woo

South Korean actor and singer Cha Eun-woo is at the center of a major tax investigation that has shaken both his career and the entertainment industry. Authorities have accused him of evading more than 20 billion won (about $14 million USD) in taxes by using a company linked to his family, and the case has sparked intense debate about whether his actions were improper.

According to The Korea Times, the National Tax Service (NTS) has claimed that Cha’s tax issue involves a company established by his mother. Investigators suspect this company may have been used to divert part of his entertainment income in a way that lowered his overall tax burden. Since corporate tax rates are generally lower than individual income tax rates in South Korea, authorities say the structure may have reduced how much he owed.

The NTS believes the company had little to no real business activity, meaning it might have been what is sometimes called a “paper company” – a business that exists mainly on paper and not in active operations. If the company was used mainly to avoid paying higher personal taxes, the tax authorities argue this was improper.

In January 2026, Cha’s agency Fantagio responded to the allegations with a public statement. The company said that the main question is whether the firm set up by Cha’s mother should be treated as a real taxable entity under Korean law. Fantagio also emphasized that nothing has been finalized yet and that they plan to “actively explain our position through lawful procedures.” They added that Cha and his tax representatives would cooperate fully with the ongoing review.

Cha Eun-woo himself addressed the controversy directly on his social media during his military service. In his personal statement, he apologized to fans and the public for the concern the situation caused and said he had taken time to reflect on his responsibilities as a citizen when it comes to paying taxes. He explained that he was writing the post after performing his daily duties in the military and emphasized that his current service was not an attempt to avoid the controversy. Cha said that last year he could no longer postpone his mandatory enlistment, so he entered the military even though the tax review was not yet complete.

He acknowledged the seriousness of the situation and said he would fully cooperate with all procedures while accepting the final decision made by the relevant authorities. In a heartfelt part of his message, he stated he would reflect more strictly on himself in the future and live with a greater sense of responsibility.

Fans’ reactions to the allegations and his apology have been mixed but largely supportive. Many followers posted messages of encouragement on his social media, expressing hope that he would get through the situation and continue his career once the matter is resolved. Despite the seriousness of the allegations, there has been a surge of emotional support from fans around the world.

The controversy has already affected Cha’s public image and commercial partnerships. Major advertisers have reportedly pulled some of his advertisements from online platforms, and there is uncertainty around future projects. If the authorities conclude that he deliberately evaded taxes, Cha could face additional fines or legal consequences. However, tax experts note that if the case is simply a matter of interpretation of tax law, it might result in back payments and penalties rather than criminal charges.