Brands pull plug on Cha Eun-woo ads as criminal evasion team digs into tax-dodging allegations

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Brands pull plug on Cha Eun-woo ads as criminal evasion team digs into tax-dodging allegations

Published: 26 Jan. 2026, 15:50

Audio report: written by reporters, read by AI

Singer and actor Cha Eun-woo poses for photos during the opening of Swiss luxury watch brand Audemars Piguet’s Asia-Pacific flagship store in the Seongsu-dong neighborhood of Seongdong District, eastern Seoul, on Nov. 22, 2024. [NEWS1]

Singer and actor Cha Eun-woo, who is currently facing allegations of dodging more than 20 billion won ($14 million) in taxes through a company registered under his mother’s name, could be referred to prosecutors if intent is proven, according to a tax law expert. Advertisers, as always, have been quick to react.

Attorney and accountant Kim Myung‑gyu offered a detailed breakdown of the case on Sunday in a social media post with a title that translates roughly to “A Friendly Guide for Non‑Experts." He explained that the 20 billion won figure cited in media reports likely includes not just unpaid taxes but also penalties for underreporting and interest.

“From the public’s perspective, people might think, ‘How much money did he make if his taxes reach 20 billion won?’” Kim said. “But this figure isn’t all original taxes owed. It likely consists of around 10 billion to 14 billion won in principal taxes, with the rest made up of a 40 percent underreporting penalty and interest.”

Kim noted that Korea’s National Tax Service (NTS) imposes additional fines when it determines that taxpayers intentionally concealed income.

“If the tax office decides you lied, they can add 40 percent of the principal as a penalty," Kim said. "The NTS also adds interest for late payment, meaning Cha may be paying between 6 billion and 10 billion won as a penalty for alleged misreporting."

The National Tax Service building in Sejong [NEWS1]

Investigation Bureau 4 of the NTS Seoul Regional Office is handling the case — a unit that typically investigates suspected criminal tax evasion rather than conducting routine audits.

“Investigation Bureaus 1 and 2 are more like the ones saying, ‘Please revise this,’” Kim said. “But Bureaus 4 handles cases that the NTS treats as potential crimes — it’s like saying, ‘You’ve been caught. This is a crime.’”

Not a unique play in the entertainment industry

Kim said the core of the case appears to involve a tax-saving structure used by many entertainers: establishing a one-person corporation to pay the lower corporate tax rate of 10 to 20 percent instead of the personal income tax rate, which can reach up to 45 percent.

“Actors often do this to reduce their tax burden,” Kim wrote. “But for the structure to be valid, the corporation must have substance. That means it needs staff, a real office and actual operations. If the company is under a family member’s name and its office is registered to a parent’s restaurant or to a residence, the NTS may conclude that it lacks substantive business activity. The NTS can then revoke the tax benefits and treat the income as personal.”

He described such a case as “a desire to receive benefits without the burden of actual costs,” which he said had now “returned as a massive boomerang in the form of 20 billion won.”

Kim, however, noted that the involvement of Investigation Bureau 4 does not automatically mean wrongdoing.

“If investigators fail to prove intent in Cha Eun-woo’s case, the matter could end with a simple reassessment,” he said. “This is still at the stage of allegations.”

Not a simple mistake, most likely

Still, Kim said the case appeared to contain clear signs of careful planning.

Singer and actor Cha Eun-woo attends a press conference at the Conrad Seoul in Yeouido, western Seoul, on Dec. 22, 2022. [YONHAP]

“The evidence is too clear,” he said. “The structure is too intentional to be explained away as a mistake.”

He pointed to signs of intentional structuring: converting the corporation into a limited liability company to avoid external audits and registering the company’s address to a grilled eel restaurant in Ganghwa Island instead of a location in Gangnam District to avoid higher property taxes.

“This doesn’t look like a simple mistake,” Kim said. “It looks like a setup involving professionals — organized and deliberate.”

He emphasized that the most critical issue is not the tax amount.

“The key question isn’t how much additional tax he will pay,” Kim said. “It’s whether authorities can prove he intended to conceal income. If they conclude the scheme was designed to evade taxes, Cha could face not only a record tax bill but also a referral to prosecutors.”

The NTS reportedly questioned the legitimacy of the corporation’s operations, in part because it was registered to an address on Ganghwa Island, a largely rural area west of Incheon, raising doubts about whether it could have supported entertainment management activities.

Cha’s agency, Fantagio, released a statement, saying, “The key issue is whether the company established by Cha Eun‑woo’s mother qualifies as a substantive taxable entity. The case has not yet been finalized or officially notified, and we intend to fully explain our position through proper legal procedures regarding the interpretation and application of tax law.”

Not playing the waiting game

Brands are closely watching the National Tax Service’s investigation into Cha, with industry insiders warning that reputational damage could trigger costly penalties under existing contracts.

Cha has served as a model for numerous local and global brands, and industry observers say some may begin invoking clauses to end partnerships or seek damages. In some cases, the penalties could exceed the original modeling fees.

Last year, Cha represented Shinhan Bank, skincare brand Abib, fashion label Marithé et François Girbaud and the beauty division of the online shopping platform SSG.com.

A North Face advertisement featuring singer and actor Cha Eun-woo [NORTH FACE]

He also serves as a brand ambassador for luxury brands including Yves Saint Laurent, Chaumet and Calvin Klein. Until recently, he also modeled for fashion brand Giordano, outdoor brand The North Face, coffee brand Nescafé, LG Uplus and fried chicken brand Norang Food. His contract with massage chair company Bodyfriend is also set to expire next month.

Industry estimates suggest that Cha earned tens of billions of won in advertising revenue during the period under investigation. Fees vary widely by brand and campaign, but Cha’s per-advertisement rate is reportedly between 700 million and 1 billion won, with global brands paying as much as 2 billion to 5 billion won.

Some companies have already begun pulling the plug. Shinhan Bank removed Cha’s videos and photos from its YouTube channel and other social media platforms. The bank had hired Cha as a replacement for actor Kim Soo-hyun after he faced allegations of dating the late actor Kim Sae-ron when she was still a minor — only for the new brand ambassador to face his own scandal.

Skincare brand Abib also set its YouTube ads featuring Cha to private and removed promotional images from its Instagram and X accounts.

Cha’s upcoming drama projects also face uncertainty, as Netflix plans to release “The Wonder Fools,” starring Cha and Park Eun‑bin, in the second quarter of this year.

Cha’s representatives have retained the law firm Shin & Kim to handle the case, while his agency Fantagio has not issued any further statements as of press time Monday.

Updated, Jan. 26, 2026: Added details of sponsorship contracts, recast headline.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY CHO MUN-GYU [[email protected]]