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Company A, the franchise headquarters of a major food and beverage (F&B) chain, evaded about 70 billion won in corporate income by raising prices through so-called "shrinkflation" — keeping product prices unchanged while reducing volume. It funneled profits to a related party by inserting the affiliate into the raw material purchasing process and buying at inflated prices, and paid about 2 billion won of a specific affiliate's promotional costs on its behalf. The National Tax Service (NTS) uncovered these allegations and levied about 20 billion won in back taxes on Company A.
The NTS on the 12th released the results of tax audits targeting companies that reaped improper gains by exploiting the hardships of ordinary people's livelihoods amid high inflation. From September last year to February this year, it audited 117 companies across monopolies and oligopolies, price collusion, processed foods, agricultural, livestock and fishery products, daily necessities, and dining franchises, collecting 319.5 billion won in back taxes from 114 companies. The back taxes from the top 10 companies with the largest tax evasion amounted to 248 billion won, or 78% of the total, while the total amount evaded by the audited companies reached 769.8 billion won.
The audits uncovered numerous cases of companies raising prices by exploiting monopolistic or oligopolistic market positions, or concealing corporate income through shrinkflation tactics. Company B, a comprehensive food manufacturer, raised product prices by 5% using its dominant position in an oligopolistic market. However, the audit confirmed that it paid about 20 billion won in sales incentives to secure shelf placement and maintain business relationships, improperly accounting for these as logistics costs, and funneled about 15 billion won in profits to a related party through excessive outsourcing service payments. It was levied 20 billion won in back taxes.
Company C, another food manufacturer that prospered by raising product prices using its oligopolistic position despite declines in international prices of key raw materials, was also levied about 9 billion won in back taxes.
Company D, which set up a conduit firm under the name of a retired employee to fraudulently obtain tax invoices in order to benefit from tariff quotas, and Company E, which improperly received tax benefits by declaring items ineligible for the research and human resource development expense tax credit as eligible, were levied 7 billion won and 4 billion won in back taxes, respectively.
Also caught was Company F, a well-known coffee franchise that raised product prices under the pretext of rising import costs and then diverted corporate funds to the owner's family. The NTS levied 4 billion won in back taxes on the company's owner family.
