By Cho Mu-hyun
The National Tax Service (NTS) said Friday that it will inspect the alcoholic beverage industry to crack down on companies’ “forced sales” on wholesalers and retailers.
The move came after the owner of a wholesale shop for Baesangmyun Brewery committed suicide, Thursday, leaving a note saying that he was in heavy debt due to the pressure tactics.
“We will look into traditional alcoholic beverages, beer and imported alcohol to see whether sales are unfairly pushed onto wholesalers,” a senior tax official said.
NTS officials declined to comment on which companies they were looking into, only saying the initial inspection was “comprehensive.” They also said it was too early to say the possible duration of the probe and whether a formal investigation will be launched.
It is known that the enforced sales practice is widespread in the industry as manufacturers are not allowed to sell directly to restaurants and bars. Wholesalers and retailers with licenses supply the drinks to these.
The tax agency has full authority not only to give licenses for manufacturing and sales, but also to supervise the production and distribution of alcohol. It also has the right to determine the tax rate.
As enforced sales, known as “pushing” here, usually force purchases of large quantities, the NTS suspect that to avoid losses, receipts for taxes may have been discarded during transactions. Both alcoholic beverage sellers and their wholesalers and distributors will be looked into.
The NTS will conduct on-site investigations of companies suspected of tax evasion and levy fines on them if it finds evidence of this. It can also force them to reduce sales by 40 percent for a certain period if any pushing is detected.
“Besides forcing purchases, companies can also fake sales by just manipulating records without actually shipping products, and the NTS will likely look into that as well,” said an industry official, declining to be named.
A spokesman for Oriental Brewery, the nation’s largest beer vendor, said the company hasn’t used enforced sales since 2010. A Hite Jinro spokeswoman said the company will follow NTS regulations sincerely.
Other major sellers of alcoholic beverages here contacted by The Korea Times declined to comment directly on the matter.
An official with an imported alcohol seller said the company and its counterparts here only sell periodically in prearranged amounts to wholesalers and it was impossible for them to force purchases.
A senior executive at one of the major breweries said the beer industry isn’t overly concerned over the investigations. “I can’t speak for other alcoholic beverage businesses, but my colleagues and I are confident that any probe will prove that allegations of pushing in our industry are groundless.”
The controversy over first surfaced last week when an audio tape of a sales employee of Namyang Dairy Products cursing and threatening an executive of a distributor was uploaded to YouTube.