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Korea forces Google and Netflix to pay digital services tax thuế

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Netflix and Google affiliates in South Korea will have to pay higher corporate taxes under an agreement from 130 countries that support the OECD’s plan to tackle tax challenges globally.

In addition to the two companies above, tech giants including Amazon, Facebook and Apple will also be subject to a tax called “Google tax”. Accordingly, large technology companies will have to pay a certain amount of corporate tax, although there is no specific number for this tax. “The government will have grounds to tax them if a deal is reached. At the moment, everything is still incomplete,” an official from the Korean Ministry of Finance said on June 1. The move is part of a global wave to tax lucrative businesses based on the country that generates their revenue, not the country where they are headquartered. Many tech heavyweights around the world have long tended to set up headquarters in countries with low tax rates in order to reduce or avoid paying taxes. Meanwhile, the profits they earn come from all over the world through online business activities that are not limited to a specific country. The OECD’s plan is said to detail ways to modify the tax regimes of member countries, in light of the rapid transformation of digital business. It also seeks to address the problem of tax base erosion and profit shifting (BEPS), combating strategies that exploit loopholes or inconsistencies in tax rules to shift profits to areas where they are not. collect or have a low tax rate. Another point of contention in the plan this time around is the push to amend the law on a permanent establishment, or a fixed place of business that generates income and a value-added tax liability in a jurisdiction. Specifically. This also includes establishing a global minimum corporate tax rate. According to the Financial Supervisory Service’s electronic disclosure system, Google Korea said that on April 14, it recorded a revenue of 220.1 billion won (equivalent to 198 million USD), up about 3.6% from a year earlier. Google’s operating profit was 15.5 billion won, up 53.4% ​​year-on-year. Net profit for the same period was 6.2 billion won, up 741.2 percent. These numbers stand in sharp contrast to tech companies in Korea such as Naver and Kakao. According to the report, the annual sales of these two companies are 5.3 trillion won and 4.1 trillion won respectively. The staggering difference is the result of Google Play Store revenue being recognized as revenue by Google Asia Pacific, which is headquartered in Singapore, not Google Korea. Industry observers also estimate Google Korea’s domestic sales to be between 5 trillion won and 6 trillion won. According to the Mobile Internet Business Association, in the group of IT and telecommunications businesses, Google Play’s sales in 2019 in the country are estimated at about 5.7 trillion won. Just as fast as Google is Facebook Korea. According to FSS data, the business recorded sales of 44.2 billion won and operating profit of 11.7 billion won last year. Facebook’s sales in South Korea grew 10.3% from 40.1 billion won in 2019, and business profits are reported to have increased six-fold year-on-year. The company’s net profit also reached 6.3 billion won, up 33 times from 190 million won in 2019, thanks to a surge in advertising revenue from Instagram. Chang Pang Hyo, head of the IT Committee at the Citizens Coalition for Economic Justice, said the US tech giants actually exist in the virtual world, and their activities cannot be determined if based only on the tax code in the branch location “Calls are growing to amend the laws to come up with a clear statement that companies are taxed where their customers use their services, not where they are located. headquarters,” he said. Thuong Hai According to Korea Times

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