Pulmuone’s Tax and Compliance

Pulmuone diligently complies with national tax laws and faithfully fulfills tax obligations arising from business activities. To ensure compliance, a formal Tax Policy has been established and regular training is provided to employees responsible for accounting and tax-related tasks. Tax risks are proactively  managed through consultation with external experts, including legal, accounting, and tax professionals, as necessary. The officer responsible for overseeing Pulmuone’s tax strategy is Chief Financial Officer (CFO) Kim Jong-heon.

Disclosure of Tax Data

Pulmuone discloses the company's reported tax(Earnings Before Tax, Reported Taxes, and Cash Taxes Paid) through the Business Report (FY2024 Annual Report).

In particular, we calculate and disclose our "Effective Tax Rate" and "Cash Tax Rate" for the last two fiscal years based on Earnings Before Tax, Reported Taxes, and Cash Taxes Paid. This enables stakeholders to evaluate our tax transparency.

1) We reviewed the Average Effective Tax Rate and Cash Tax Rate for each of the 24 GICS® Industry Groups to assess whether our company's tax rates are lower than stakeholder expectations.

Explanation for Deviation in Tax Rate

We disclose the reasons for any deviation from the industry average tax rate, enabling stakeholders to understand the legitimacy of such differences. Based on the figures from the past two fiscal years, The effective tax rate was lower than the industry average primarily due to timing-related factors, including major issues outside of the two-year period reported (such as accounting adjustments for prior reporting periods stemming from significant tax policy changes).

Specifically:
 

1) In FY2023, tax payments decreased due to the refund of additional taxes related to food brand fees. Pulmuone Foods had been suspected of tax evasion by paying high brand usage fees, as it had been paying 3% of sales revenue to the holding company for using the Pulmuone name since September 2019. However, following the tax investigation results, the company received a refund of the 23.62016 billion won additional tax assessment, resulting in a significant decrease in tax payments for FY2023. Related news articles can be found at the link below.

- Why did Pulmuone receive a 30 billion won additional tax assessment from the National Tax Service? 

- Pulmuone Foods: Tax audit assessment reduced from 23.6 billion won to 'zero won'... Tax Tribunal appeal accepted

2) In FY2024, corporate tax expenses decreased as the corporate tax levy on retained earnings was canceled due to tax law amendments.