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

Icons of Google, Amazon, Facebook and Apple on mobile phones. Photo: VNA Washington has proposed a global minimum corporate tax rate of 15%, lower than that proposed by the Group of Top Industrialized Countries (G7), but higher than some other countries such as Ireland. But the UK is still concerned that this plan does not go far enough to tax giant technology corporations such as Amazon, Google and Facebook. In a recent statement, Mr. Sunak emphasized the importance of fair taxation for technology corporations and called on the US and G7 countries to discuss this issue next week. The meeting of G7 finance ministers is expected to take place from June 4-5. According to Mr. Sunak, companies like Facebook also want to solve this problem, which can bring certainty and stability to them. Besides, Mr. Sunak also mentioned that the UK is considering a separate online sales tax, when large multinational corporations, especially digital corporations, do not pay taxes in the right places, right place and this is not fair. In 2015, member countries of the Organization for Economic Cooperation and Development (OECD) agreed in principle to a plan to prevent multinational corporations from evading taxes by moving their headquarters to countries with low tax rates. . Despite years of negotiations, progress has been insignificant. However, discussions have been revived with the recent proposal of US President Joe Biden. Recently, the US government has proposed to the OECD a tax rate of at least 15% for multinational corporations. This is the first time the US has officially proposed a global minimum tax rate. France and Germany have voiced their support for the US proposal for a global minimum corporate tax rate of 15%, and expressed hope for an early breakthrough in negotiations on this issue.

Amazon’s distribution center in Las Vegas, Nevada, USA, April 25, 2020. Documentary photo: AFP/VNA The appeal comes after the LuxLeaks scandal exposed in 2014 revealed 500 tax agreements between Luxembourg and more than 350 international businesses, including many billion-dollar tax frauds and involving corporations. such as Apple, IKEA, Pepsi… These corporations have had tacit agreements with the tax authorities of Luxembourg to enjoy lower tax rates than prescribed. In the case of Amazon, in 2017 European Competition Commissioner Margrethe Vestager accused Luxembourg of having an illegal arrangement with the online commerce giant to pay less tax than other businesses. other profession. Accordingly, Luxembourg has offered a preferential tax policy for Amazon, helping nearly three-quarters of the company’s profits not be taxed. At the heart of the EU’s allegations is Amazon’s violation of the so-called “market price principle”, which ensures that transactions between subsidiaries are based on prices that other independent companies in the market would charge. must return. At the time of the EU case, Amazon said it had not received any special treatment from Luxembourg, and insisted it had paid taxes in full in accordance with both Luxembourg and international tax law. However, analysts are not too optimistic about the ability of the EU’s requirements to be upheld. Less than a year ago, iPhone maker Apple won a spectacular victory in this same court against the European Commission’s request that Apple pay 13 billion euros in taxes to Ireland in 2016. But whether it wins or loses in the appeal, the European Commission will likely emphasize its goal of targeting corporate profits. The agency is also developing new rules to close tax loopholes, especially for tech giants. In recent weeks, the US side has gradually embraced the idea of ​​a global minimum corporate tax. Negotiations on cross-border corporate tax are underway at the Organization for Economic Cooperation and Development (OECD). If successful, this tax policy will make special transactions for multinational companies a thing of the past.