Diageo has been hit with a tax demand for over US$153m in South Korea.

The drinks giant has been accused by the tax authorities in South Korea of gaining undue profits by allegedly misrepresenting the prices of spirits imports into the country since 2004. A spokesperson for Diageo confirmed to just-drinks today (14 January) that the company has received a preliminary audit assessment notice from the Seoul Customs Office (SCO) for KRW206.5bn (US$153.2m) for the period from February 2004 to June 2007.

The audit, which began in January last year, covers the duties paid on imports of Diageo's Scotch whisky brands into Korea.

The company has appealed the assessment. "We are robustly defending the current (valuation) position, which has been in place since 2004 and had previously been accepted by the SCO," the company said. "We will make no further comment while the pre-taxation deliberation is ongoing."

Local reports this week have said that the Korean Customs Service will hold a meeting in the next month to review whether the fine is appropriate.

In June 2007, Diageo was stripped of its import licence for South Korea after it was found to be using unlicensed wholesalers in the country. The company secured a new import licence for the country in February last year.