Mercedes-Benz Korea slapped with W50 bil. corporate tax
Mercedes-Benz Korea CEO Dimitris Psillakis
By Lee Hyo-sik
Mercedes-Benz Korea (MBK) has been ordered to pay 50.1 billion won ($42.8 million) in back taxes, the largest amount ever imposed on a foreign imported car brand, the company said Tuesday.
The National Tax Service (NTS) imposed the payment on the German automaker, headed by CEO Dimitris Psillakis, company officials said.
“The NTS notified us that we owed back taxes,” an MBK official said. “But the truth is we don’t owe any taxes so we immediately filed a petition with the tax agency to nullify its decision.”
But the official did not say what the NTS stated in its notice the reason for imposing the tax.
The latest tax charge is taking things from bad to worse for the German luxury car brand as it is already facing investigations from multiple government agencies.
Earlier in the day, the Ministry of Land, Infrastructure and Transport (MOLIT) said that it decided to ask the prosecution to investigate the company after the carmaker was found to have sold four S350 diesel models with nine-speed transmissions without registering them with the relevant authorities.
Company CEO Psillakis and other senior executives will likely be summoned for questioning after prosecutors begin an investigation into whether they knowingly broke the law by selling uncertified vehicles.
From Jan. 27 to Feb. 29 when Mercedes-Benz was ordered to suspend sales of the unregistered S350 diesel model, it sold a total of 98 cars. The four S-Class models are the S350 d, S350 d 4Matic, S350 d L and S350 d 4Matic L.
The company had reported that it was only importing and selling its cars equipped with seven-speed transmissions known as 7G-Tronic.
“We filed a complaint against MBK Tuesday with the Seoul Central District Prosecutors’ Office,” a ministry official said. “We will closely keep an eye on foreign carmakers to check whether they obey the law.”
Under the law, all carmakers are required to register all vehicles sold here with MOLIT. Violators could face a 10 million won fine or a maximum one-year prison sentence.
The companies are also required to report vehicles’ emissions data to the Ministry of Environment, as well as register their energy efficiency with the Ministry of Trade, Industry and Energy. Those who don’t could pay up to 1.5 percent of the vehicle value as a fine.
In response, MBK said it respects the government decision, adding that it will fully cooperate with the investigation.
“As soon as we found that the four S350 models, which were first imported last December, were equipped with the 9G-Tronic transmission, we notified the authorities,” the company said. “We also promptly instructed our dealers to suspend the sale of the vehicles. We will register the cars with the government and follow up on other legally required procedures.”
The company said it will send a written apology to customers who purchased the vehicles. “We also plan to compensate affected customers. We will try to more faithfully abide by the laws and regulations.”
The German automaker is also facing a separate probe by the Fair Trade Commission for its initial decision not to refund part of excise taxes to customers who bought its vehicles in January.