Half-priced imported liquor may disappear due to tax regulations

Half-priced imported liquor may disappear due to tax regulations [Photo by Kim Ho-young]

Price discrimination or discount sales of imported liquors, such as wine and whiskey, in business-to-business transactions will be prohibited under tax regulations this year, according to a new guideline from Korea’s liquor-related industry associations, which is causing panic among liquor retailers.

Critics say the measure violates the principles of the market economy as all retailers, large or small, must procure alcoholic beverages from wholesalers at the same price.

The Liquor Trade Order Committee, an autonomous consultative body set up by five liquor-related industry associations involving companies in liquor manufacturing, import and distribution, sent a new guideline to member companies at the end of January, which is causing confusion to retailers, people familiar with the matter told Maeil Business Newspaper on Sunday.

The new guideline stipulates a ban on all types of discounts in relation to imported alcohol transactions starting this year. Under the current law, all discounts related to alcohol are illegal, a government official said.

Concerns are also growing that there may be consumer price hikes for imported alcoholic beverages.

Until now, large supermarket chains and convenience stores have sold alcohol to consumers at a low price by bringing down their unit price of imported liquor through bulk purchases. However, under the new guideline, 4,475 liquor wholesalers nationwide must sell the same product at the same price to 765,100 convenience stores, supermarkets and wine shops.