"Cha Eunwoo's 20 Billion Won Tax Evasion? No More Tolerance"... Bill Proposed to Prevent Tax Evasion by Single-Person Agencies

Amendment to the Act on the Development of Popular Culture and Arts Industry Proposed in National Assembly

Numerous One-Man Entertainment Agencies Suspected of Tax Evasion

Number of Agencies Surges to 6,140... "Cha Eunwoo Prevention Law" Gai

It is expected that controversies over tax evasion by celebrities through "single-person agencies" will soon be curbed. The National Assembly has begun amending the law to address oversight blind spots in entertainment agency management and to block individuals with a history of tax evasion from entering the industry.

Actor Cha Eunwoo, recently accused of tax evasion related to a one-person agency. Provided by Fantagio

According to the cultural sector on March 5, Assemblyman Jeong Yeonwook, a member of the National Assembly’s Culture, Sports and Tourism Committee, has sponsored a partial amendment to the Act on the Development of Popular Culture and Arts Industry. The amendment aims to strengthen the management system of entertainment agencies and establish tax justice.

The industry is closely monitoring the bill, which has been dubbed the "Cha Eunwoo Prevention Law." Recently, actor Cha Eunwoo was embroiled in a tax evasion scandal involving about 20 billion won, while Lee Hanee faced suspicions of evading around 6 billion won in taxes. Both are suspected of using single-person agencies to reduce their tax burdens. Additionally, there have been growing concerns about the management gap as more actors are found to have established single-person agencies without registering as popular culture and arts businesses.

Amid the K-content boom, the number of small-scale companies and single-person agencies has surged, pushing the total number of agencies to a record high. According to data from the Ministry of Culture, Sports and Tourism provided by Assemblyman Jeong, as of the end of last year, there were 6,140 registered popular culture and arts agencies. New registrations increased by 73% over four years, from 524 in 2021 to 907 in 2025.

The main issue is that, despite this quantitative growth, the management system remains inadequate. Currently, registration, modification, and closure of agency businesses are handled by local governments, but the Ministry of Culture, Sports and Tourism, as the central authority, lacks the legal basis to comprehensively manage agencies nationwide. This has led to criticism that the government structure makes it difficult to directly supervise the industry. There has also been criticism of so-called "blind administration," where, under the pretext of delegated administration, the government is unable to properly grasp the actual state of the industry.

The proposed amendment focuses on improving this structure. It requires agency operators to report their registration and business status to the Minister of Culture, Sports and Tourism annually, and obligates local governments to inform the ministry of their related administrative decisions.

Assemblyman Jeong emphasized, "The Ministry of Culture, Sports and Tourism should not hide behind the excuse of delegating responsibilities to local governments, but must directly take on management and oversight."

It is a natural trend for celebrities to establish their own single-person agencies after leaving their former agency. However, it is an open secret within the industry that many such agencies are operated primarily for tax avoidance rather than for actual management functions. Analysts point out that this structural issue is behind the repeated appearances of famous celebrities’ names on the National Tax Service’s list of high-value tax delinquents and in tax audit results.

The core of tax evasion through single-person agencies in the entertainment industry lies in the "tax rate gap." Instead of paying personal income tax rates as high as 49.5%, celebrities can establish corporations and benefit from corporate tax rates in the 10-20% range. When large agencies pay fees to a single-person corporation rather than directly to the celebrity, it can significantly reduce the tax burden, even if no actual services are rendered. Additionally, it is common to reduce taxes by listing personal manager salaries or vehicle maintenance costs as corporate expenses.

The key point of the proposed amendment is to restrict individuals with a history of tax evasion from entering the industry. Under current law, only those with a record of sex crimes or child abuse are restricted from working in the industry. Even those fined billions of won for tax evasion faced little to no restrictions in operating an agency.

The amendment adds violations of the "Punishment of Tax Offenses Act" resulting in a fine or greater as grounds for disqualification. It also restricts not just agency representatives but also internal employment, aiming to block the influence of those with a history of tax evasion within the industry. The purpose is to eliminate shell agencies and address widespread moral laxity within the sector.

Assemblyman Jeong stated, "While K-content is leading the global market, our agency management system remains stuck in the past. This amendment is a minimal measure to close loopholes that allow individuals with a history of tax evasion to operate in the industry and to establish transparency and fair order within the sector."

This content was produced with the assistance of AI translation services.