The National Tax Service said on the 27th that it will conduct tax audits of 17 corporations, including manufacturers of daily necessities such as sanitary pads and wet tissues. The agency believes these corporations evaded 400 billion won by inflating costs or underreporting corporate income.
That day, the National Tax Service said, "We confirmed that some corporations are raising prices of daily necessities through various unfair practices." It added, "They were found to have exploited monopolistic and oligopolistic market structures or engaged in collusion to excessively raise prices of daily necessities, and to have used methods such as falsely purchasing raw and subsidiary materials."
Those surveyed for this tax audit fall into three broad categories: ▲ five monopolistic or oligopolistic corporations engaged in price collusion ▲ six manufacturers and distributors of daily necessities that inflated costs ▲ six food distributors that inserted special-related corporations controlled by the Oner family in the middle of the distribution process to collect so-called toll fees.
According to the National Tax Service, food additive manufacturer Company A manipulated the situation to make it appear that materials and supplies costs had risen and raised product prices in concert with competitors. Company A was also said to have received collusion proceeds from the colluding competitor. With the profits thus obtained, excessive maintenance expense payments were made to a company controlled by the Oner family, it was found.
Seafood wholesaler Company B inserted a company of the Oner family into the distribution process and paid so-called toll fees. As a result, distribution expense rose, and seafood prices were reportedly raised by 33.3%. The company was also found to have reported processed seafood, which is subject to value-added taxes, as tax-exempt goods.
Sanitary pad maker Company C raised prices by 33.9%, citing product premiumization, but was found to have inflated expense by overpaying more than 30 billion won in sales incentives and more than 5 billion won in sales commissions, respectively, to a special-related corporation. Company C was also found to have set up a disguised affiliate under the name of a retiree and excessively paid for services such as material transfers and packaging.
Meanwhile, this is the third time under the current administration that the National Tax Service has launched tax audits of corporations that caused price increases through unfair practices. It conducted tax audits of 55 corporations in Sep. last year and 31 corporations in Dec. of the same year.