Korean Government Looking to Tax Global IT Companies
Global IT companies in Korea like Google, Amazon, Apple, and etc will start getting taxed in Korea. Many of these companies have been getting billions of dollars in sales in Korea but were not paying taxes in Korea. This has drawn a lot of criticism from Korean companies looking to complete with these giants. Kakao and Naver have been lobbying for years to have these global companies pay corporate income tax on the revenue they get in Korea. The reason why the Korean government was not able to tax these global IT companies was because it was not required for these companies to disclose their sales and revenue.
These global companies HQ is in other countries which is why they didn’t have to pay corporate taxes. In addition, this allowed Korea to bring in a lot of global companies into Korea and help with connecting Korea’s tech ecosystem with the world. However, the downside is that most of these companies were not giving back to Korea in the form of taxes. Google is looking to replace Naver, WhatsApp is looking to replace Kakao, and Amazon is looking to replace Coupang.
Good news for Korean Companies?
While Korean companies have to deal with regulations and corporate taxes, they also have to compete with global IT companies in Korea.
Taxing these global companies will be the first step in the Korean government looking to level the playing field. However, this could lead to global companies avoiding the Korean market overall. Therefore, there is a balance here that needs to be taken into account. Does the Korean government want Korea to be a global friendly economy at the risk of hurting Korean companies? Or are they looking to help Korean companies by setting regulations to global companies?
Taxing polices for these global IT companies will be set by the Ministry of Economy and Finance. A decision should be coming by the end of August. There is a chance the Ministry will also lighten the regulations on Korean companies. Creating a fair tax system will be one of the main issues this month for this Ministry.
