Mercedes-Benz Korea said it was notified by the NTS that the investigation will start as early as this weekend. NTS allegedly plans to look into suspicions that the company has been dodging taxes by importing cars from its headquarters in Germany at inflated prices.

It has been alleged that Mercedes-Benz Korea has been making illegal profits since it costs more to import the same car into Korea than it does into Japan and the U.S.

According to Eugene & Company, a former Mercedes dealer covering Gyeonggi Province and Bundang, the top-end Mercedes S500L sedan costs roughly W90.92 million (US$1=W938) in the U.S. and W111.15 million in Japan.

In Korea the import price of the same car is W114.69 million. Once the local office tacks on its sales margin and tax, the S500L costs a whopping W206.6 million here, almost double what Japanese and American buyers pay.

"This practice means Mercedes-Benz Korea has been transferring profits to its German head office," an automobile industry source said. "It raises suspicions that the company is intentionally reducing profits in Korea in order to escape paying taxes."

An executive with a car import company said other importers are afraid a ripple effect from the tax probe will bring them similar troubles.

(englishnews@chosun.com )