Pernod has spoken out following reports of its tax affairs in South Korea

Pernod has spoken out following reports of its tax affairs in South Korea

Pernod Ricard has denied it has been fined by South Korea's tax authorities, but has conceded that it paid a tax adjustment following an audit.

Last week, the Korea Times quoted anonymous sources claiming that Pernod's South Korea unit had been fined KRW10bn (US$9.4m) by the Korean National Tax Service (KNTS) for tax evasion. The report alleged that the company had “inflated” costs for advertisements so it could report lowers profits and avoid tax.

However, a Pernod spokesperson told just-drinks today: “What we had to pay was a tax adjustment, not a fine. 

"We had submitted some expenses that we considered A&P (advertising and promotional) expenses, but the KNTS considered them as travel and other expenses.”

An additional statement issued by Pernod said: “The KNTS 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," the statement continues, "there are no cases of tax evasion or operating cost inflation in our accounting and financial statements, nor criminal liability related thereto.

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

In June, Pernod was hit by the threat of strike action in South Korea over a retirement plan put forward by the company. Separately, job losses were expected following a sales team restructure in the country as part of the group's global cost-cutting programme, Allegro.