Tax Authority Steps In Amid Soaring Oil Prices, Launches Crackdown on Illegal Fuel Distribution

As fuel prices rise due to the crisis in the Middle East, the public is facing a heavier energy cost burden, and the National Tax Service of South Korea has now stepped in. With a price ceiling system under consideration and collusion investigations already under way, the involvement of the tax authority signals that the government is ramping up all-out pressure on the market.
According to the National Tax Service of South Korea on the 10th, nationwide on-site inspections and tax audits are planned for businesses suspected of illegal fuel distribution. Targets include those allegedly producing fake fuel or engaging in undocumented transactions to reap excessive profits by taking advantage of high oil prices.
To this end, starting today the agency plans to deploy around 300 personnel from seven Regional Tax Offices and 133 district tax offices across the country, focusing on intensive, on-the-ground inspections.
Specifically, the crackdown will focus on undocumented, disguised, or fabricated transactions involving petroleum products, as well as businesses that sell at high prices but underreport their sales. In particular, the National Tax Service will also look into the production and distribution of fake fuel and the illegal diversion of tax-exempt fuel that tend to occur in a high oil price environment. If tax evasion is detected during inspections, the agency plans to immediately convert the case into a full tax audit and respond strictly.
To ensure effectiveness, part of the on-site inspections will be carried out jointly with the Korea Petroleum Quality & Distribution Authority. The combination of the National Tax Service’s taxation data and the authority’s expertise in petroleum products is expected to create a strong synergy, leading to the detection of a significant number of fake fuel cases that exploit consumer anxiety.
The National Tax Service also plans to actively participate not only in the Pan-Governmental Task Force for Oil Market Inspection, but also in special inspections led by the Korea Petroleum Quality & Distribution Authority. Through this, it will examine the entire distribution process for illegal practices and possible tax evasion.
Businesses found to have abnormal transaction structures, manipulated accounting records, or false reports on supply and demand during inspections will be referred for tax audits. The agency will thoroughly verify whether taxes have been evaded, and for repeat offenders, it plans to continuously monitor both their transaction structures and tax filing status.
The National Tax Service is also making advance preparations so that stock inspections of oil refining companies can be carried out in a timely manner in anticipation of the introduction of a price ceiling system, cuts in fuel tax rates, and regulations against hoarding. It plans to issue guidance to related businesses, urging them to maintain appropriate shipment and inventory levels.
Sim Uk-gi, Director General of Corporate Taxation, emphasized, "The National Tax Service will continue on-site inspections, tax audits, and joint inspections with relevant ministries to crack down on practices that exploit high oil prices, increase the burden on consumers, and disrupt market order, thereby working to stabilize people’s livelihoods and foster a fair market environment."

syj@fnnews.com Seo Young-jun Reporter