Imported beer sales has been exhibiting steady growth in Korea in recent times thanks to competitive pricing, possibly as a result of tax loopholes.
However, beer drinking connoisseurs are about to be served a flat pint as the Korea Institute of Public Finance (KIPF) responds to lobbying by local breweries by reviewing their tax policy.
Currently, beer incurs an alcohol tax of 72%, plus an education tax of 30% plus 10% VAT. These taxes are applied to the factory price, but for foreign beers the true value of the product is often cleverly disguised in layers of invoices.
Korean Customs have investigated several instances where imported beer is undervalued on export documents in order to reduce the value that duties are based on.
To level the playing field KIPF is considering changing the system so that taxes are based on the alcohol per litre. A similar system is used in other markets in Asia including Singapore and Indonesia.