CHAPTER I GENERAL PROVISIONS

Article 1 (Purpose) The purpose of this Act is to prescribe the requirements and procedures for imposing liquor tax in order to impose liquor taxes fairly, ensure the proper fulfillment of tax liability, and contribute to the smooth raising of the financial revenue.

Article 2 (Definitions) The terms used in this Act are defined as follows:  <Amended on Aug. 8, 2023>

1. The term "alcoholic beverages" means the following:

(a) Spirits (referring to ethyl alcohol which can become drinkable when diluted, and including crude spirits which may become drinkable, if purified, though not made directly drinkable due to impurities contained);

(b) Beverages with at least one percent alcohol content [including those in powder state that can become drinkable when dissolved, but excluding drugs defined in the Pharmaceutical Affairs Act and seasoned food containing alcohol prescribed by Presidential Decree)

(c) Those similar to beverages under item (b), which are prescribed by Presidential Decree;

2. The term "alcohol content" means the amount of ethyl alcohol (referring to what has a specific gravity of 0.7947 at 15℃) contained in the total volume;

3. The term "specifications of alcoholic beverage" means the following classification criteria of alcoholic beverages:

(a) Quantity of raw materials used for the manufacture of alcoholic beverages;

(b) Kind and ratio of materials that can be added to alcoholic beverages;

(c) Alcohol content and nonvolatile ingredients of alcoholic beverages;

(d) Period of storage of alcoholic beverages in wooden casks;

(e) Filtering method of alcoholic beverages;

(f) Other classification criteria of alcoholic beverages;

4. The term "nonvolatile ingredients" means non-volatile ingredients contained in the total volume;

5. The term "malt" means cultivated and proliferated yeast that can ferment sugar-containing materials into alcohol;

6. The term "wort" means materials in the stage from having added media that can ferment raw materials of alcoholic beverages to right before they are brewed or distilled into alcoholic beverages;

7. The term "brewing or distilling year" means the period from January 1st to December 31st of each year;

8. The term "traditional liquor" means any of the following alcoholic beverages:

(a) Alcoholic beverages manufactured by a holder of a national intangible heritage, in the area of alcoholic beverage, recognized under Article 17 of the Act on the Safeguarding and Promotion of Intangible Heritage, and by a holder of a City/Do-designated intangible heritage, in the area of alcoholic beverage, under Article 32 of that Act;

(b) Alcoholic beverages manufactured by a Korean food master in the area of alcoholic beverage who is designated under Article 14 of the Food Industry Promotion Act;

(c) From among alcoholic beverages directly produced by agricultural business entities or producers' organizations under Article 3 of the Framework Act on Agriculture, Rural Community and Food Industry or fisheries business entities or producers' organizations under Article 3 of the Framework Act on Fisheries and Fishing Villages Development, or alcoholic beverages manufactured by using agricultural products manufactured in the Special Self-Governing City, Special Self-Governing Province, or Si/Gun/Gu (Gu refers to an autonomous Gu; hereinafter the same shall apply) having jurisdiction over the location of a place for manufacturing alcoholic beverages or in the Special Self-Governing City or Si/Gun/Gu adjacent thereto as main ingredients, alcoholic beverages produced upon recommendation by the Special Metropolitan City Mayor, a Metropolitan City Mayor, a Special Self-Governing City Mayor, a Do Governor, or a Special Self-Governing Province Governor pursuant to Article 8 (1) of the Act on Promotion of Korean Traditional Liquor Industries;

9. The term "yeast" means the following:

(a) Fungi proliferated in materials containing starch;

(b) Fungi proliferated in a mixture of materials containing starch and other materials;

(c) Enzymes that can reduce materials containing starch into sugar;

10. The term "person entrusting the manufacture of alcoholic beverages" means a person who entrusts another person with the manufacture of alcoholic beverages pursuant to Article 3 (8) of the Liquor License Act in order to sell the alcoholic beverages with his or her own trademark on his or her own account and responsibility.

11. The term "person entrusted with the manufacture of alcoholic beverages" means a person who manufactures alcoholic beverages after being entrusted with the manufacture of the alcoholic beverages pursuant to Article 3 (8) of the Liquor License Act by a person entrusting the manufacture thereof.

Article 3 (Taxpayer) Any of the following persons shall be liable to pay liquor tax pursuant to this Act:

1. A person who manufactures alcoholic beverages and releases them from a manufactory (in cases of alcoholic beverages the manufacture of which is entrusted, such person refers to a person entrusting the manufacture of the alcoholic beverages);

2. A person who imports alcoholic beverages and is liable to pay customs duties thereon pursuant to the Customs Act.

Article 4 (Objects of taxation) Liquor tax shall be imposed on alcoholic beverages pursuant to this Act.

Article 5 (Kinds of alcoholic beverages) (1) Alcoholic beverages shall be classified as follows:

1. Spirits;

2. Brewed alcoholic beverages:

(a) Makkoli;

(b) Rice wine;

(c) Refined rice wine;

(d) Beer;

(e) Fruit wine;

3. Distilled alcoholic beverages:

(a) Soju;

(b) Whisky;

(c) Brandy;

(d) Other distilled alcoholic beverages;

(e) Liqueur;

4. Other alcoholic beverages:

(2) The alcoholic beverages listed under paragraph (1) shall be as specified in detail by kind in the Appendix.

Article 6 (Specifications of alcoholic beverages) (1) The degree of alcohol content shall be expressed by the volume of alcohol content contained in a total volume of 100 milliliters of an alcoholic beverage at 15℃.

(2) The degree of nonvolatile ingredients shall be expressed by the weight in grams of those contained in a total volume of 100 cubic centimeters of an alcoholic beverage at 15℃.

(3) No alcoholic beverages shall contain any harmful ingredients prescribed in the Food Sanitation Act or other sanitation-related statutes and regulations prescribed by Presidential Decree.

(4) Matters necessary for the specifications of alcoholic beverages shall be prescribed by Presidential Decree.

CHAPTER II TAX BASE AND TAX RATE

Article 7 (Tax base) (1) The tax base for spirits, makkoli, and beer shall be the quantity of alcoholic beverages according to the following classifications:

1. Where they are released from a manufactory: The quantity released;

2. Where they are imported: The quantity declared for import;

(2) The tax base for alcoholic beverages other than spirits, makkoli, and beer shall be the price of alcoholic beverages classified in the following subparagraphs:

1. Where they are released from a manufactory: The price at the time of release;

2. Where they are imported: The price at the time of declaration for import.

(3) The price at the time of release from a manufactory as provided for in paragraph (2) shall not include the tax amount for the corresponding alcoholic beverages, but include the container costs and packing expenses; provided, the price shall not include container costs and packing expenses prescribed by Presidential Decree.

(4) Matters necessary for the calculation of the quantity of alcoholic beverages under paragraph (1) and the price thereof under paragraph (2) shall be prescribed by Presidential Decree.

Article 8 (Tax rate) (1) The tax rates for alcoholic beverages shall be as follows:  <Amended on Dec. 21, 2021; Dec. 31, 2022; Dec. 31, 2023>

1. Spirits: 57,000 won per kiloliter (600 won shall be added for each percent over 95 percent alcohol content)

2. Brewed alcoholic beverages: The following applicable tax rates:

(a) Makkoli: 44,400 won per kiloliter;

(b) Rice wine, fruit wine, refined rice wine: 30/100;

(c) Beer: 885,700 won per kiloliter; provided, such tax rate for beer sold in a container of at least eight liters using a separate extracting device, which is released from a manufactory or declared for import on or before December 31, 2026, shall be 80/100 of the tax rate specified in the main clause, and an amount of less than 100 won shall be rounded off;

3. Distilled alcoholic beverages: 72/100;

4. Other alcoholic beverages:

(a) Alcoholic beverages under subparagraph 4 (a), (c) through (e) of the Appendix: 72/100; provided, the tax rate shall be 10/100 for those with 30 or higher percent of nonvolatile ingredients among alcoholic beverages falling under subparagraph 4 (c) of the Appendix;

(b) Alcoholic beverages falling under subparagraph 4 (b) of the Appendix: 30/100.

(2) The tax rate of makkoli or beer may be adjusted by Presidential Decree within the limit of 30/100 of the tax rate under paragraph (1) 2 (a) or (c) in consideration of the fairness of taxation with other alcoholic beverages, the level of tax burden, the stabilization of the price of alcoholic beverages, etc.  <Added on Dec. 31, 2023>

(3) The tax rate for traditional liquor which is not more than the release quota prescribed by Presidential Decree, among alcoholic beverages prescribed by Presidential Decree, may be reduced by up to 50/100 of the tax rate specified in paragraph (1) or (2), as prescribed by Presidential Decree.  <Amended on Dec. 31, 2022; Dec. 31, 2023; Dec. 31, 2024>

CHAPTER III DECLARATION AND PAYMENT

Article 9 (Declaration of tax base) (1) A person who has released alcoholic beverages from a manufactory shall submit to the head of the competent tax office a written declaration which indicates the kind, alcohol content, quantity, price, tax rate, assessment of tax, tax amount subject to deduction, refundable tax amount, payable tax amount, etc., of the alcoholic beverages released from the manufactory each quarter no later than the 25th day of the month following the quarter in which the date of release thereof falls.

(2) In cases falling under subparagraph 2 or 3 of Article 15 or under Article 16, a manufacturer of alcoholic beverages shall submit to the head of the competent tax office a written declaration under paragraph (1) on the alcoholic beverages that are deemed to have been released, by the end of the month following the month in which the date of occurrence of the relevant ground falls.

(3) A person who imports alcoholic beverages from overseas shall submit to the head of the competent customs office a written declaration under the Customs Act at the time of declaration for import.

Article 10 (Payment) (1) A person who has released alcoholic beverages from a manufactory shall pay to the head of the competent tax office the tax amount calculated by multiplying their quantity or prices by the applicable tax rate.

(2) A person who imports alcoholic beverages from abroad shall pay to the head of the competent customs office in the tax amount calculated by multiplying their quantity or prices by the applicable tax rate.

Article 11 (Deadline for payment) (1) Liquor tax shall be paid each quarter to the head of the competent tax office by the deadline for submission of a written declaration under Article 9 (1); provided, liquor tax on imported alcoholic beverages shall be governed by the Customs Act.

(2) When a person files a written declaration under Article 9 (2), the person shall pay the liquor tax to the head of the competent tax office by the deadline for submission of the written declaration.

CHAPTER V TAX EXEMPTION

Article 20 (Tax exemption) (1) Any of the following alcoholic beverages shall be exempted from liquor tax as prescribed by Presidential Decree:  <Amended on Aug. 8, 2023>

1. Those exported;

2. Those supplied to foreign military forces stationed in Korea;

3. Those supplied to Korean military forces stationed in foreign countries;

4. Those supplied to foreign diplomatic missions stationed in Korea or other institutions equivalent thereto as prescribed by Presidential Decree;

5. Those supplied to recreation centers for foreign seafarers;

6. Those collected for examination in accordance with the Liquor License Act or the Food Sanitation Act;

7. Those that have been manufactured by the holders of skills designated as intangible cultural heritage under Act on the Safeguarding and Promotion of Intangible Cultural Heritage, and to be used for exhibition of intangible cultural heritage under that Act;

8. Those used as raw materials for the manufacture of medicine under the Pharmaceutical Affairs Act;

9. Spirits used for the manufacture of gunpowder, for tobacco fermentation (limited to for export), for fuel, for medical treatment and medicine, and other industrial purposes;

(2) Any of the following imported alcoholic beverages shall be exempted from liquor tax as prescribed by Presidential Decree:

1. Those directly imported for official use by foreign diplomatic missions stationed in the Republic of Korea and other institutions equivalent thereto as prescribed by Presidential Decree;

2. Those directly imported for consumption by foreign diplomats in the Republic of Korea and those equivalent thereto as prescribed by Presidential Decree;

3. Those donated from abroad to temples, churches, or other religious organizations for ritual;

4. Those hand carried by travelers and exempt from customs duty;

5. Those imported as raw materials for the manufacture of medicine under the Pharmaceutical Affairs Act;

6. Those collected for examination in accordance with the Liquor License Act or the Special Act on Imported Food Safety Control;

7. Exported alcoholic beverages returned to one of manufactories of the person who has manufactured the alcoholic beverages by reason of deterioration, poor quality, or other unavoidable causes.

(3) The head of the competent tax office or the head of the competent customs office shall, without delay, collect liquor tax on alcoholic beverages for which export, import, or supply is not proven within the specified period, from the manufacturer or the person declared the import thereof, under paragraphs (1) and (2); provided, the liquor tax may be exempted for those whose certificate has been lost due to a natural disaster or other unavoidable reasons, as prescribed by Presidential Decree.

(4) If deemed necessary for alcoholic beverages exempted from liquor tax under paragraph (1) or (2), the head of the competent tax office or the head of the competent customs office may order provision of security equivalent to the relevant liquor tax amount, as prescribed by Presidential Decree.

(5) If alcoholic beverages exempted from liquor tax pursuant to paragraph (1) or (2) are not used for their original purposes, the liquor tax shall be collected without delay. In such cases, a person who possesses tax-exempt alcoholic beverages under paragraph (1) (excluding subparagraph 9 of that paragraph) or paragraph (2) shall be deemed a person who has manufactured alcoholic beverages; a person who has imported tax-exempt alcoholic beverages shall be deemed a person who has imported alcoholic beverages; in cases of spirits that are exempted from liquor tax pursuant to paragraph (1) 9, the location of goods or the place of delivery shall be deemed the alcoholic beverage manufactory; and the business operator of the relevant place shall be deemed a person who has manufactured alcoholic beverages.

CHAPTER VI SECURITY FOR TAX PAYMENT

Article 21 (Security and guarantee for liquor tax) If deemed necessary for securing liquor taxes, the head of the competent tax office shall order a manufacturer of alcoholic beverages to provide security for liquor tax or to retain alcoholic beverages in value equivalent to the payable liquor tax amount as security for his or her tax payment (hereinafter referred to as "alcoholic beverages provided as security for tax payment"), as prescribed by Presidential Decree.

Article 22 (Appropriation of alcoholic beverages provided as security for tax payment for liquor tax) Where a taxpayer fails to pay his or her liquor tax by the payment deadline pursuant to this Act, the head of the competent tax office shall sell alcoholic beverages provided as security for tax payment by public sale, as prescribed by the National Tax Collection Act, and shall appropriate the amount for liquor tax payment.

Article 23 (Retention of alcoholic beverages provided as security for tax payment) No manufacturer of alcoholic beverages shall dispose of or release from the manufactory alcoholic beverages provided as security for tax payment that are ordered to be retained by the head of the competent tax office pursuant to Article 21.

Article 24 (Application mutatis mutandis of the National Tax Collection Act) Except as provided in this Act, the provisions of Articles 18 through 23 of the National Tax Collection Act shall apply mutatis mutandis to securities provided for tax payment.

Article 25 (Inquiry or inspection) (1) A public official engaged in business affairs regarding liquor tax may, if necessary for conducting the business affairs, make questions about matters related to the liquor tax to a manufacturer of alcoholic beverages, malt, or wort or a vendor of alcoholic beverages; inspect accounting books, documents, or other articles; or issue an order to submit any of them.

(2) Where applying paragraph (1), a public official engaging in business affairs regarding liquor tax must not abuse his or her authority for other purpose beyond the extent necessary for performing his or her official duties.

Article 26 (Application to entrustment of manufacture of liquor) The provisions of Chapters II through VI shall apply with regard to alcoholic beverages manufactured by entrustment under Article 3 (8) of the Liquor License Act, as follows:  <Amended on Dec. 21, 2021; Dec. 31, 2022> 1. "Manufactory of alcoholic beverage" or "manufactory" in Article 7 (1) through (3), 8 (1), 9 (1), 10 (1), 15, 16, 17 (1) or (2), or 23 shall be construed as a manufactory in which a person entrusted with the manufacture of alcoholic beverages manufactures the relevant alcoholic beverages;

2. "Quantity released" or "quantity" in Article 7 (1) and (4), 8 (3), 9 (1), or 10 (1) means the quantity released from the manufactory of a person entrusted with the manufacture of alcoholic beverages;

3. "Prices at the time of release" or "prices" in Article 7 (2) and (3), 9 (1), or 10 (1) means the prices at the time a person entrusting the manufacture of alcoholic beverages sells them to a third party;

4. "Person who has released alcoholic beverages", "person who intends to release alcoholic beverages", "person who releases alcoholic beverages", "manufacturer of alcoholic beverage", "person who has manufactured alcoholic beverages", "manufacturer", in Article 9 (1) and (2), Article 10 (1), Article 17 (2), (3), and (6), Article 18 (1) 1, Article 20 (2) 7, (3), (5), Article 21, or Article 23 shall be construed as a person entrusting the manufacture of alcoholic beverages.

CHAPTER VII PENALTY PROVISIONS

Article 27 (Administrative fines) (1) A person who possesses alcoholic beverages tax exempted under Article 20 for the purpose of sale or sells them shall be subject to an administrative fine not exceeding 20 million won.

(2) Administrative fines under paragraph (1) shall be imposed and collected by the head of the competent tax office as prescribed by Presidential Decree.