The National Tax Service is investigating the European Union Chamber of Commerce in Korea for allegations of dodging taxes from possible profits it made through advertisements on their magazine, the tax authority said on Thursday.

“The Namdaemun branch of the tax agency began their probe on the EUCCK last week to study revenue the non-profit organization made from collecting advertising fees,” an NTS official told The Korea Herald.

The probe will tell whether the EUCCK has made any taxable income from collecting advertising fees for the monthly magazine it publishes. Should the EUCCK be found guilty of dodging taxes and business malpractice, it could sour the lobbying group’s relationship with the Korean government at a time when business ties are growing ever stronger with the trade pact between the two in effect.

The EUCCK has a systemic fee structure for member companies wishing to be featured on their magazine. Pricing ranges from 2 million won ($1,800) for one off promotions near the back-cover, to 40 million won for ads next to the table of contents. It charges 12 million won for a website banner over a year and 5 million won for advertorial interviews on the magazine.

Their monthly flagship business magazine Infomag is distributed to their more than 850 member companies, embassies and the Korean government institutions.

Other foreign business groups such as the Australian Chamber of Commerce and the American Chamber of Commerce are also found to have structured pricing system for advertisement fees.

“The National Tax Service’s probe is under way and we are now watching the probe results,” a EUCCK spokesman told The Korea Herald. “We will announce our official position after the probe is completed.” He said the probe started Feb. 21, adding that he has no knowledge about why the NTS launched an investigation into the EUCCK.

Members that were contacted either refused to comment saying that it was a chamber matter or said that they felt disappointed in what is going on.

Established in 1986, the chamber is an independent gathering of European companies advocating for pro-European companies policies in Korea. The Korean government recognizes the Chamber as the representative voice of investors from all 27 member states who are doing business in Korea.

Korea’s trade volume with the EU increased by nearly 3.9 percent on-year over six months after the bilateral trade agreement took effect in July, government data said. The increase came even as Korea’s trade surplus plunged to $740 million between July and January on subdued demand from financially distressed Europe.

By Cynthia J. Kim (cynthiak@heraldcorp.com)