[비즈한국] The tax evasion controversy surrounding actor Cha Eun-woo is making headlines. While tax-related issues involving celebrities often appear the same, the nuances vary from case to case. In the past, the primary causes were often cited as errors or mismanagement by tax representatives. In 2011, Kang Ho-dong was issued a notice for 700 million won in additional taxes by the National Tax Service (NTS). This occurred because less tax had been paid during his 2007–2009 comprehensive income tax filings. Although it was claimed that the incident was caused by his agency's oversight, he faced heavy criticism that he could not have been unaware of the situation. Consequently, Kang Ho-dong announced his sudden retirement that September. The final conclusion was that it was a simple tax error, not intentional evasion. Actor Kim Ah-joong was also hit with 600 million won in additional taxes at the time. Kim Ah-joong's side emphasized that it was an error on the part of her tax representative.
In 2014, a tax evasion controversy involving Song Hye-kyo arose. The issue stemmed from the omission of supporting documents for approximately 5.5 billion won in expenses claimed during the three-year period from 2009 to 2011. Criticism grew that it was intentional tax evasion, especially since Song Hye-kyo had been awarded a commendation as an exemplary taxpayer in 2009. Eventually, her tax representative was disciplined for negligence, and Song Hye-kyo's side even filed a lawsuit against the tax representative. The matter was concluded when Song Hye-kyo personally apologized at a press conference.
The central point of these issues was whether the celebrity was involved in tax saving measures through items like deductible expenses. Recently, tax issues for celebrities have been stemming from the operation of one-person agencies. Actor Lee Hanee, who runs a one-person agency, was ordered by the Seoul Regional Tax Office to pay 6 billion won in 2024. While her agency reported it as corporate income and paid corporate tax, the NTS viewed it as personal income. Personal income tax, including local tax, can reach up to 49.5%, while corporate tax is significantly lower at a maximum of 24%. This is considered one of the backgrounds for establishing one-person agencies. Lee Hanee paid the additional tax and entered an appeal process. Her position is that it constitutes double taxation because she had already reported the income as corporate income and paid corporate tax. On the other hand, the NTS judged that even if the agency had a corporate structure, Lee Hanee's individual acting activities were the primary source of revenue, and the entity failed to function as a legitimate corporation. This reflects the view that the one-person agency was a mere shell. Double taxation is the counter-argument typically raised by those facing such tax audits.
Similarly, actor Yoo Yeon-seok was notified of 7 billion won in additional taxes in March 2025. Yoo Yeon-seok’s side argued that their one-person agency had been producing YouTube content, engaging in side businesses, and operating restaurants, and that since they had already paid corporate income tax, imposing personal income tax would be double taxation. The NTS accepted this explanation and reduced the additional tax to 3 billion won, acknowledging that the entity was not a mere shell for a one-person agency.
Actor Lee Joon-gi was also ordered to pay 900 million won in 2023 for the same reason. There was a difference in perspective regarding whether transactions between his agency, Namoo Actors, and his one-person agency, JG Entertainment, constituted corporate income or personal income. Lee Joon-gi’s side paid the tax while filing an appeal with the Tax Tribunal, which is currently undergoing review. In the case of Park Na-rae, allegations were raised that she evaded billions of won in taxes by withholding personal income within a one-person agency established in 2018 and falsely processing expenses. This also pointed toward the operational methods of a one-person agency.
The recent case of Cha Eun-woo appears more serious than previous ones. It is not only handled by the 4th Investigation Bureau of the Seoul Regional Tax Office, often called the "Grim Reaper of the business world," but the amount is the largest ever at 20 billion won. The core issue is that he paid lower corporate taxes rather than personal income tax rates through a corporation established by his mother. Controversy was particularly high because the corporation was known to be an eel restaurant located in Ganghwa-do run by his mother. Its location and nature seemed completely incapable of performing celebrity management services. The NTS did not view the revenue as earnings from providing celebrity management services through his mother's corporation outside of his actual agency. The finding was that there was no independent organization, personnel, or actual business activity. It was viewed as a family company where family members took turns running the entity.
The NTS also questioned the conversion of the stock corporation run by Cha Eun-woo's mother into a limited liability company. They suspected it was a scheme for so-called "blind" management, as limited liability companies are not subject to external audits or disclosure requirements. On top of this, suspicions of "evasive enlistment" have also surfaced. The agency has applied for a pre-adjudication request, stating they will prove that all procedures were lawful. Cha Eun-woo’s case is similar to Lee Joon-gi's in that there is a main agency, and profit was distributed through transactions with a separately established one-person agency. However, overall, there are several different issues compared to the past.
While cases surrounding one-person agencies have recently become prominent, the important thing is to return to the essence. It is not the one-person agency system itself that is the problem, but how it is operated. We must stop the practice of using them as a way to preserve profits while families operate them as mere formalities; instead, they should be equipped with professional organizations, personnel, and systems. It is problematic if a one-person agency becomes merely a tool for tax avoidance.
One-person agencies have an identity and principle of protecting artists, enhancing their rights, and developing the pop culture and arts industry. We must not forget this basic spirit and philosophy. Just as those who establish one-person agencies are now required to register as pop culture and arts planning businesses, it is time for systematic and policy-based management, such as requiring mandatory training on operating one-person agencies. Most of all, cases that have successfully established and operated one-person agencies in a transparent manner should be widely shared to foster a positive direction.
The author, Kim Heon-sik, has been walking through the forest of pop culture phenomena since his 20s with the expectation that there is a way to make the world a better place through culture. He continues on this path in the 21st century, where artificial intelligence and quantum computers are active, with the same belief.