[Exclusive] The "Grim Reaper" Fourth Bureau Launches Tax Investigation into Kumho Petrochemical

Investigation into Trademark Royalties and Subsidiary-Related Matters

The National Tax Service is currently conducting a tax investigation into Kumho Petrochemical. The investigation reportedly focuses on transactions between affiliated companies and whether Kumho Petrochemical has received licensing fees for the use of the ‘Kumho’ trademark from its subsidiaries.

According to industry sources on August 11, the Investigation Bureau 4 of the Seoul Regional Office of the National Tax Service conducted a special tax audit at the Kumho Petrochemical headquarters in Jung-gu, Seoul on this day. Investigation Bureau 4 is responsible for irregular (special) tax audits involving allegations such as slush fund creation or tax evasion by companies, and is often referred to as the ‘grim reaper of the business community’ or the ‘Central Investigation Bureau of the National Tax Service.’

It is reported that Investigation Bureau 4 has focused on all transactions among subsidiaries within the Kumho Petrochemical Group. In particular, the probe is said to be centered on whether Kumho Petrochemical, as the de facto holding company of the group, received trademark licensing fees from its affiliated companies, and if so, whether there were any unfair practices in the process.

Previously, in 2007, the Kumho Group transitioned to a dual holding company structure with Kumho Industrial and Kumho Petrochemical, jointly registering trademarks such as ‘Kumho’ and ‘Asiana’ under the names of both companies. Later, in 2010, after Kumho Asiana Group entered into a workout process and Chairman Chan-Koo Park separated Kumho Petrochemical Group, disputes over trademark rights began. In 2013, Kumho Asiana Group filed a lawsuit claiming that the ‘Kumho’ trademark was solely owned by Kumho Engineering & Construction, and demanded that Kumho Petrochemical and Kumho PNB Chemical, as well as Kumho Development Corporation, return their shares of the trademark and pay approximately 26.1 billion won in unpaid trademark usage fees. Ultimately, in 2023, after losing the final appeal at the Supreme Court, Kumho Engineering & Construction and Kumho Petrochemical came to jointly own the relevant trademarks.

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