NTS audits 52 suspected mask hoarders

National Tax Service (NTS) Assistant Commissioner for Investigation Lim Kwang-hyun, left, give a press briefing at the NTS in Sejong, Tuesday. Yonhap

By Lee Kyung-min

The National Tax Service launched an audit into a group of sellers and brokers over suspicions that they hoarded protective face masks, pushing up the price of what many consider a daily necessity to prevent further spread of the fast-spreading coronavirus, Tuesday.

Individuals engaged in what the authorities deem “mass purchase that manipulates regular market circulation” will be subject to an audit of their past five years of records and referred to related authorities if any irregularities are discovered.

The investigation comes amid brewing public criticism over the shortage of masks despite the combined maximum capacity of the country's 140 mask manufacturers standing at 10 million per day.

The tax agency said 258 officials were dispatched early Tuesday to look into 52 online sellers and middlemen in the chain of distribution for suspicion that their illicit acts led to a spike in the price and shortage of masks.

Included are a group of brokers that exported masks overseas, and online sellers that sought profit by demanding the buyers pay in cash.

Also being investigated are middlemen whose purchase volume spiked after January, when the demand for the protective masks began to soar upon a sharp rise in the number of infected corona virus patients.

Most of these middlemen and brokers are said to have bought masks at a price of between 300 won ($0.25) and 800 won each and sold them for up to 5,000 won each, netting themselves hundreds of millions of won in profit in the process.

“While no irregularities were found with most of the 275 mask manufacturers and sellers nationwide, we found irregularities with 52 individuals running a combined 129 firms,” an NTS official said.

Tax-dodging attempts including accounting irregularities and failure to issue receipts will all come under scrutiny.

Any activity from the past five years will be looked into and the period will be extended to 10 years if any irregularities are found.

Under the recently revised law that took effect Feb.5, “illicit mass purchase” of face masks is a criminal offense, punishable by up to two years in prison or a fine of up to 20 million won.

Such purchases are defined as a business or individual hoarding over 150 percent of their monthly average sales volume for over five business days. This applies to sellers that began business before 2019.

For those who opened business in the last two months, not releasing stocks within 10 days of being supplied is considered a crime.