Companies that raised consumer prices by exploiting their monopoly or oligopoly positions in the market and then underpaid taxes were caught by the National Tax Service. They siphoned off taxes by reporting that they purchased materials and supplies at high prices from counterparties or paid processing labor costs to owner families.
The National Tax Service said on the 12th that from September last year to on Feb., it conducted tax audits of 117 companies that raised product prices but did not properly report income, and collected 319.5 billion won from 114 of them. The remaining three are under investigation.
By type, the largest amount collected was related to dominant market positions (monopoly or oligopoly), at 180.9 billion won. Improper foreign exchange outflows and allocated tariff, 58.5 billion won; franchise headquarters, 35.9 billion won; processed foods, agricultural, livestock and fisheries products, and daily necessities, 20.4 billion won; weddings and funerals, 14 billion won; collusion (price or bid), 9.8 billion won.
A major F&B franchise effectively raised prices through "shrinkflation," reducing product volumes instead of raising sticker prices. A National Tax Service probe was found that the company inserted a related-party entity to buy materials and supplies at high prices, allocating profits of 2 billion won. It was found that the company also evaded 70 billion won in corporate income by improperly supporting an affiliate through a method of paying 2 billion won in promotional expenses on its behalf.
Another well-known coffee franchise raised coffee prices citing higher green bean costs, then was found to have funneled 2 billion won to the owner family as processing wages and other payments. It was confirmed that the owner's child received 4 billion won to acquire real estate and stocks but did not file gift tax.
A general food manufacturer that raised product prices by about 5% by using its monopoly or oligopoly position in the market excessively paid outsourcing processing service fees to an affiliate and imported goods at high prices from an overseas local subsidiary, allocating 15 billion won in profits.
A funeral plan company that sells plans on home shopping and other channels raised prices by abolishing existing products and launching similar new ones. However, it bore 3 billion won more than its share of joint costs such as affiliate employee labor expenses. It was found that it paid hundreds of millions of won to an owner's child, who had never actually worked, under the pretext of overseas business trip expenses.
The National Tax Service said, "Any company found to have evaded taxes it should rightly pay while excessively raising prices under the pretext of economic conditions will be immediately selected for investigation," and added, "In our audits, we will thoroughly verify using every possible tool, including tracing financial accounts."