Heineken Under Investigation For Alleged New Tax Scheme In Korea
Heineken Korea is under investogation for rigging prices to save tax.
The Korean subsidiary of the second largest beer producer in the world, Heineken International, is under investigation by the Korean customs authority for allegedly manipulating original import prices of its beer brands to lower tax. If found guilty of the charges, the tax scheme could mean a fine of more than 10 billion won ($8.9 million).
Pulse News reports that the Korea Customs Service is finishing its investogation into Heineken Korea. The authority is expected to expand investigations to all import beer retailers in South Korea following suspicions of more tax schemes. Korea imposes a 113% alcohol tax. A underreport of 100 won could save the distributor tax dues by more than 100 won per 500 ml canned beer.
Industry sources explained that it might be easy for Heineken Korea to arrange tax schemes since it is fully owned by its headquarters in the Netherlands. The customs service is also looking into whether the head office has been aware of this practice and has directed the Korean unit to do so, per Pulse New reports.
Unethical business practices
The has been found to engage in tax schemes in other countries and the new allegations come at a time when the beer giant is under fire for several unethical business practices.
Heineken’s exploitation of women has caught widespread international attention, when an investigative journalsist exposed that the multinational is using beer promotional girls in 10 countries.
Pervasive alcohol harm in South Korea
The Global Alcohol Status Report 2018 published by the World Health Organization shows the high levels of alcohol harm in South Korea. Per capita alcohol use has increased since 2010 is is far higher than the regional average. Korean alcohol users consume on average 16 liters of alcohol per person per year. 70% of male alcohol users are engaging in heavy episodic alcohol consumption. The prevalence of alcohol use disorders in the country is 13.9%, also way above the regional average of 4.7%, according to the World Health Organization.
Alcohol taxation – a best buy alcohol policy solution
In contrast to Big Alcohol’s actions, alcohol taxation is endorsed by the World Health Organization as a best buy measure in reducing and preventing alcohol-related harm – a public health priority in South Korea.
For example, a study of 42 high-, middle- and low-income countries found that raising excise duties on alcohol to at least 40% of the total retail price would increase tax revenue in these countries by 80% to US$ 77 Billion. Expressed as a proportion of total current spending on health, it is low-income countries that have most to gain (additional receipts would amount to 38% of total current spending on health).
Implementation of evidence-based alcohol taxation is also likely to have a net positive effect on employment, as consumers divert their spending on other (healthier) products, services and needs.