Will Prices of Domestic Soju and Whiskey Drop? National Tax Service Actively Considering Introduction of Standard Sales Ratio

Tax Base Measures to Eliminate Discrimination Against Foreign Alcohol
"We Must Strengthen the Competitiveness of Our Alcohol Instead of Regulation-Centered Administration"

The National Tax Service (NTS) is drawing attention as it actively considers introducing a 'standard sales ratio system' to resolve the issue of tax discrimination against domestically produced alcoholic beverages, potentially lowering the ex-factory prices of domestic soju and whiskey.

On the 20th, the NTS held the 'K-SUUL Policy Seminar,' bringing together experts in alcohol manufacturing, policy, marketing, and industry stakeholders to discuss directions for alcohol policy. At the event, the NTS expressed its intention to consult with the Ministry of Economy and Finance to ensure that domestic alcohol is not discriminated against in the domestic market and to prepare for the early implementation of the 'domestic alcoholic beverage standard sales ratio system' if introduced.

The standard sales ratio is a rate applied when determining the individual consumption tax. A certain percentage is multiplied and excluded from the tax base. The larger the standard sales ratio, the lower the tax owed, which can reduce the ex-factory and consumer prices of alcoholic beverages to some extent. Currently, imported alcoholic beverages use the import declaration price as the tax base, whereas domestic alcoholic beverages use the manufacturing cost plus selling and administrative expenses as the tax base, leading to relatively higher tax burdens on domestic products.

The Alcohol Competitiveness Enhancement Task Force (TF), composed of the Ministry of Economy and Finance, Ministry of Agriculture, Food and Rural Affairs, Fair Trade Commission, alcohol-related experts, and association executives, is also discussing measures to exclude distribution costs and profits when calculating taxes on domestic alcoholic beverages.

Additionally, the NTS plans to provide administrative and institutional support so that traditional liquors, which account for only 1% of the Korean alcohol market, can focus on developing high-quality products. This includes significantly simplifying traditional liquor tax reporting and improving the increased tax burden on Makgeolli when flavoring agents are added. The NTS also plans to pursue legal improvements to support domestic whiskey and brandy, such as raising the recognition rate for oak barrel evaporation losses during tax reporting.

Kim Chang-gi, Commissioner of the National Tax Service, stated, "If we have focused on 'regulation-centered' administration until now, it is time to prioritize 'strengthening the competitiveness of our alcohol' while placing the highest priority on public health." He added, "We will continue to provide unwavering support so that our alcohol can be fully recognized in the global market."

This content was produced with the assistance of AI translation services.