Mercedes calls tax probe ‘routine’

The National Tax Service is set to launch a tax investigation as early as this weekend into the Korean unit of Mercedes-Benz, raising suspicion that the luxury carmaker has evaded taxes.
Mercedes-Benz Korea said in a release yesterday that the tax agency had notified it about the investigation, which the carmaker explained is a routine event for global companies that operate in Korea.
“Global firms are subject to regular tax investigations if their operation period exceeds five years,” the release said.
Adding that it has filed a lawsuit against some ex-Mercedes-Benz dealers who have spread “false rumors,” the import carmaker claimed it has been conducting “lawful” corporate business activities.
Despite Benz Korea’s denial, industry insiders say the luxury brand has allegedly given cars imported from the German headquarters much higher price tags than the same models shipped to other countries, such as the United States and Japan.
By swelling the import price at the headquarters, Benz Korea seemingly turns less profit here, thus paying smaller taxes than it should. Actual profits, meanwhile, go to its German headquarters.
The allegation surfaced about two months ago, when a former Korean dealer for Benz Korea unveiled the import prices of several Benz cars.
According to the disclosure, the import price for the S500L model shipped to Korea this January was 114.7 million won ($124,715), while the same model was sold at 92.7 million won in the United States.
The price gap, which already stands at around 22 million won, grew bigger after sales and dealer margins and taxes were added. The final price tag for the S500L in Korea was 187.8 million won, almost double the U.S. price.
The price gap between luxury cars sold here and overseas is not confined to Mercedes-Benz.
The Fair Trade Commission, a government-run antitrust watchdog, is currently investigating not only Benz Korea but also BMW and Audi on allegations of abuse of their market dominance and overpricing policy.
An official from the commission declined to reveal the exact date for the announcement of the probe result.

By Seo Ji-eun Staff Writer [spring@joongang.co.kr]