Starting next year, the excise tax burden on draft beer sold at restaurants and pubs is expected to increase as the 20th% excise tax relief benefit, which has been in effect since 2020, is set to expire at the end of this year. Consequently, analyses suggest that the price per 500ml serving could rise by up to 1,000 won.
According to industry sources on the 19th, the Ministry of Economy and Finance's recently released "2026 Tax Reform Plan" indicates that the government has decided not to extend the temporary excise tax reduction system for draft beer, which is set to end on December 31 this year.
The draft beer tax rate reduction system was introduced in 2020 when the beer taxation framework shifted from an ad valorem tax based on price to a specific tax based on volume. At that time, the tax rate was temporarily reduced by 20% to mitigate concerns about a sharp increase in the ex-factory prices of draft beer due to the tax reform. The government maintains that the objective of the system has been sufficiently achieved and has therefore decided to let it expire.
If this tax reform plan is passed by the National Assembly, the excise tax rate applied to draft beer will rise from the current 80% to 100%. While the excise tax for regular beer is 885,700 won per kiloliter (kL), draft beer was taxed at 708,500 won due to the relief benefit. If the excise tax rate reaches 100%, the excise tax alone will increase by 177,200 won per kL.
When education taxes and value-added taxes linked to the excise tax are added, the actual tax burden will increase by more than 200,000 won per kL. This translates to an additional tax of approximately 5,000 won per 20-liter keg (cask) of draft beer, or about 127 won in increased tax burden per 500ml serving.
However, the tax increase will not necessarily be immediately reflected in consumer prices. The actual price hike may vary depending on whether beverage manufacturers absorb the ex-factory cost increases, margins at wholesale and distribution stages, and individual business pricing strategies.
Furthermore, the extent of the increased tax burden could change during this year's legislative discussions on budget and tax laws in the National Assembly. On the 7th, People Power Party Representative Kim Eun-hye introduced a bill titled "Partial Amendment to the Excise Tax Act," which proposes removing the sunset clause for the 20th% excise tax relief benefit on draft beer. The core of the current law sets an expiration date of December 31 this year; the proposed amendment aims to eliminate this deadline and maintain the 20th% reduced tax rate indefinitely.
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