[Edaily Marketin Reporter JI YEONG-EUI ] It has been confirmed that SEOJIN SYSTEM CO., LTD(178320), a domestic KOSDAQ-listed company with a market capitalization approaching 5 trillion won, failed to disclose that it had received a tax payment demand in the range of 100 billion won from local authorities in Vietnam. Although the company maintains that the matter was not subject to disclosure, it is likely to spark controversy given that it failed to inform the market of a risk that could significantly impact investment decisions—especially since the CEO was barred from leaving the country and customs clearance was temporarily disrupted.

A 100-billion-won Tax Bomb Explodes in Vietnam… CEO Barred from Leaving the Country, Customs Delays

According to an exclusive report by Edaily on the 4th and information compiled from investment banks (IBs), SEOJIN SYSTEM CO., LTD’s local manufacturing subsidiary in Vietnam recently underwent an investigation by local customs authorities regarding its imports of raw materials and exports of finished goods. As a result, the company was ordered to pay 1.85 trillion dong (approximately 107.5 billion KRW) in value-added tax and was fined 40 billion dong (approximately 2.3 billion KRW). During a review of import, production, and export records for the past five years, it was determined that inventory records for certain periods were not sufficiently substantiated. In addition to the subsidiaries that received tax assessment notices, additional tax audits are underway for other local affiliates, including Seojin Auto.

It is understood that Vietnamese authorities have imposed a travel ban on Jeon Dong-kyu, CEO of SEOJIN SYSTEM CO., LTD, in connection with the tax assessment. CEO Jeon has been stranded in Vietnam since the beginning of the year and is currently on a long-term stay there.

It is understood that the tax audit temporarily halted customs clearance in Vietnam, causing disruptions to production. SEOJIN SYSTEM CO., LTD is a metal equipment manufacturer that produces energy storage systems (ESS), semiconductors, telecommunications equipment, and electric vehicle parts. In particular, the ESS division has been regarded as a core business that has recently driven up the company’s stock price and enterprise value.

As the company has been expanding its production lines in Vietnam and investing in a U.S. plant to meet demand from global customers, the tax and customs risks arising at its Vietnamese production base are seen as variables that could lead to production delays, delivery delays, and delays in revenue recognition.

The issue raised by the Vietnamese tax authorities is whether the batteries and components imported into the Vietnamese factory were actually used in the production of finished Energy Storage System (ESS) products. If the imported raw materials were incorporated into finished products and exported, the company could receive a tax refund or exemption; however, if it cannot prove this, there is a possibility that the materials were consumed locally or used for other purposes. In such cases, the authorities may demand tax payments, and the longer the period for which evidence is lacking, the higher the tax liability will inevitably become.

Given SEOJIN SYSTEM CO., LTD’s recent financial performance, a tax risk in the 100 billion won range is significant. SEOJIN SYSTEM CO., LTD’s consolidated operating profit last year was 1,145.78 million won, a 98.9% decrease from the previous year. The taxes owed far exceed 90 times last year’s operating profit. Last year’s revenue stood at 1.06633073 trillion won, down 12.1% from the previous year, and the company posted a net loss of 102.4207 billion won, marking a shift to a deficit.

Only Minority Shareholders Were Unaware… Despite Customs Blockage and a 100 Billion Tax Bomb, “Disclosure Can Wait”

To address the tax issue, SEOJIN SYSTEM CO., LTD has obtained a letter of guarantee from a local Vietnamese bank, submitted it to customs, and is currently filing an appeal. It is understood that funds lent to the company by CEO Jeon Dong-kyu were used in the process of securing the letter of guarantee from the local bank. The source of the funds CEO Jeon lent to the company comes from proceeds generated during the recent buyback of shares from existing financial investors (FIs), such as Crescendo Equity Partners. Shinhan Investment Securities and Hana Securities, which provided bridge loans to fund CEO Jeon’s put options, temporarily acquired the existing FIs’ shares. When the stock price rose, they shared a portion of the resulting capital gains with CEO Jeon, and these funds were then used as a loan to the company. Although submitting a guarantee letter has reduced the immediate burden of paying taxes in cash, separate financial conditions—such as guarantee fees, the provision of collateral, or the use of credit lines—may still apply, meaning the liquidity burden has not completely disappeared.

Furthermore, considering that tax issues are typically difficult to resolve and tend to drag on, this situation could act as a negative factor for the company’s financial burden, its ability to secure additional funding, and investor sentiment.

An investment industry official criticized the situation, stating, “Even though the CEO sold his shares to provide a loan to the company, it is ultimately a debt for the company,” and added, “It has already been more than several months since it was said that the issue of the CEO’s travel ban would be resolved quickly.”

SEOJIN SYSTEM CO., LTD maintains that, since the tax audit concerns a subsidiary and the findings have not yet been finalized, the matter is not subject to public disclosure. The company stated, “This is not a fine or a retroactive customs duty assessment, but rather a request to pay value-added tax (VAT) on goods supplied free of charge,” adding, “We received batteries and components from global clients, incorporated them into finished energy storage system (ESS) products, and then re-exported them. However, some discrepancies arose during the local authorities’ verification of inventory records based on incoming and outgoing shipment documents, and we are currently providing an explanation.”

The company explained that it is clarifying the actual usage and export records, and since there is a possibility of a VAT refund if its appeal is successful, it is difficult to view this as a definitive loss.

Regarding whether to disclose this information, the company maintains that it determined there was no immediate need for disclosure. The company stated, “Since this matter has not yet been finalized and involves a tax audit of a subsidiary, we may disclose relevant details through footnotes or other means in the second-quarter report if necessary,” adding, “Although customs clearance was temporarily blocked during the initial response process, operations have now returned to normal.” The company also stated that it is responding to investigations of other local affiliates as part of routine customs inspections, and that these do not involve criminal complaints or special audits.

However, it appears the company will find it difficult to avoid criticism for concealing information that could influence investor decisions. In particular, some investors and market participants note that while they were aware of the customs investigation and the risk of substantial tax liabilities, minority shareholders would have been unable to verify this information without a public disclosure, making debates over information asymmetry and market fairness inevitable.