Ildong Holdings has been under investigation by the Seoul Regional Tax Service since the end of September, Sisa Journal e.com reported on Nov. 30.
The tax service officials stayed at Ildong Holdings from the end of September to the end of October and conducted a field investigation. As of this day, no additional tax has been collected, the media reported quoting the pharmaceutical sources.
In response, Ildong Holdings reportedly said that it is a regular tax investigation that the company received prior notice from the Seoul National Tax Service. This is the first probe in six years since the regular tax investigation carried out in late 2012 and early 2013.
In August 2016, Ildong Pharmaceuticals was divided into four major companies, Ildong Holdings, Ildong Pharmaceuticals, Ildong Bioscience, and Ildong Hyaltech in the course of being converted into a holding company system.
The pharmaceutical industry is paying keen attention to the background and process of the investigation by the service's investigation bureau No. 1, which is in charge of tax audits of large companies, at Ildong Holdings, which was established two years ago.
"There are not many cases where the National Tax Service conducted tax investigations into the holding company of a group. The recent cases of CJ or Ildong Holdings are very rare," a senior tax accountant pointed out.
It is said that Ildong Holdings has stabilized its management since its establishment two years ago. It made accumulated sales of 34.4 billion won in the third quarter of this year and grew by 7.8 percent year-on-year. Its operating profit jumped 94.4 percent year-on-year to 1.7 billion won. Its net profit also changed from last year's deficit to this year's surplus.
Based on these results, some in the pharmaceutical and tax industries predict that the tax investigation targeted at the holding company is aimed at the owner of the Ildong pharmaceutical group. The owner refers to Yun Paul Woongsup, the president of Ildong Pharmaceutical Co. who is the third generation of the founder and the late Chairman Yun Yong-koo.
The tax accountant pointed out that holding companies in general do not manufacture their own products or generate sales so that the tax probe for the holding company can be seen as the one aimed at the owner.