2017.5.31

                                                           Lee,Eun Jin CTA.

This article is to review the tax risk of alcoholicdrink company.

Ⅰ. Purchase (liquor import)

1. High rate of customs and tax on liquor forimporting liquor.

Liquor purchase amount = (customs taxable value+ customs ) + tax on liquor + educational taxes + value added tax.

2. Transfer pricing taxation and customstaxable value.

(1)expensive purchase → applying transfer pricingtaxation.

Inthe case of importing expensive liquor from affiliate person a normal price isapplied not dealing price. If the import is not from affiliate person dealingprice is applied.

 (2)Purchase in low price → applying customs taxablevalue.

  1)(customs taxable value + customs 30% ) ……⒜

 + tax on liquor (72% of ⒜ ) ……⒝

 + educational taxes (30% of ⒝ )….⒞

 + value added tax (10% of ⒜+⒝+⒞) = liquor purchaseprice.

2) Country in FTA can be different from othercountry.

(3) Judgement for the down pricing on importliquor.

There is a case, down the price for liquorimport and pay with the name of consulting fee or usage fee.

It it is judged as relating with imported liquor,tax will be charged.

① Relating imported good.

The payment for the trademark right for thepurchasing liquor can be shown as relating with imported liquor.

② Payment for the patent, utility modelright, design right, trademark rights can be added in the importing goods andtax is charged.

Ⅱ Sales item

(1) According to the rules of accounting, taxamount for liquor is deducted in sales price. Therefore the discrepancy amountinfluence to the limitation of entertainment expenses.

(24 million or 12 million)+ 0.2% of salesamount (under sales amount 10,000 million).

(24 million or 12 million) + 20 million + 0.1%of sales amount (over 10,000 million, under 50,000 million).

24 million or 12 million + 60 million + 0.03%of sales amount ( over 50,000 million).