Pernod Ricard denies Korea tax evasion

Pernod Ricard has denied reports its Korea unit has been charged 10 million won (£5m) for tax evasion, claiming “differences of interpretation” arose from a recent audit.

Pernod Ricard Korea blamed “differences of interpretation” in its most recent audit for the high tax adjustment

Earlier this week reports from Seoul and Paris claimed the French drinks group was guilty of inflating advertising and other costs to lower its reported profits and subsequent tax liability.

It was asserted that the Korean National Tax Service had therefore fined Pernod Ricard Korea, which is headed by former UK director Jean-Manuel Spriet, for tax evasion.

While the NTS has not confirmed the reports, Pernod has responded in a statement: “The Korean National Tax Service has conducted a regular tax audit on Pernod Ricard Korea from July 2009 to July 2013.

“In the assessment there are differences of interpretation relating to some technical areas, however there are no cases of tax evasion or operating cost inflation in our accounting and financial statements, nor criminal liability related thereto.”

A spokesperson for the group added the 10m won tax adjustment was due to a “technical interpretation difference in relation to the tax classification of advertising expenditures. Korean Tax authorities never questioned the reality of these expenditures nor the operational nature of this spending which was fully incurred to develop our business in Korea.”

The French group’s operating profit declined by 73% in the year to June 2013, according to figures filed with South Korea’s Financial Supervisory Service.

“Pernod Ricard Korea has fully cooperated with the tax authorities throughout the audit and is following the correct protocol to address these matters,” the statement concluded.