Cha Eun-woo Prevention Law: Entertainment Agency Tax Evasion Crackdown

Efforts are underway to prevent opaque management and tax evasion risks within entertainment agencies through the enactment of the so-called “Cha Eun-woo Prevention Law.”

Rep. Jung Yeon-ok of the People Power Party, a member of the National Assembly’s Culture, Sports and Tourism Committee, announced on November 1st that she would be leading the proposal of an amendment to the “Popular Culture and Arts Industry Development Act.”

Rep. Jung stated, “K-content is leading the global market, but the management system for agencies remains outdated. We can no longer tolerate the institutional loopholes that allow those with a history of tax evasion to operate agency businesses.”

She further explained, “This bill is the minimum measure to establish a fair order by enhancing industrial transparency and accountability.”

Rep. Jung is leading the proposal of an amendment that requires entertainment agency operators to report their registration and business status annually to the Minister of Culture, Sports and Tourism. The aim is to manage these reports, including details processed by local governments, through the Ministry.

According to Rep. Jung, there were 6,140 registered popular culture and arts planning companies as of the end of last year. New registrations, which numbered only 524 in 2021, increased to 907 last year. She pointed out the problems with the entities managing agencies, stating that this was “a result of the proliferation of single-person agencies and small-scale companies riding the K-content wave.”

Disqualification requirements have also been strengthened. While current law restricts those convicted of sex crimes and child abuse from operating agencies, there are no restrictions on those punished for tax evasion. The amendment includes those who have received a fine or higher punishment for violating the Act on the Aggravated Punishment, etc. of Specific Tax Crimes as grounds for disqualification. The amendment restricts not only agency representatives but also those working for the company.