發布日期:2023-02-02 06:16:06
Google Korea's Seoul office is seen in this 2016 file photo. Newsis
Global tech giants understate earnings in Korean market
By Park Jae-hyuk
Google and Netflix have been accused of understating their earnings in Korea again last year to pay smaller amounts of corporate taxes, as Apple's local subsidiary did last year, according to their regulatory filings, Friday.
In 2021, Google Korea paid only 13.8 billion won ($11.2 million) in corporate taxes, as its 2021 operating profit stood at 29.3 billion won, while its sales were 292.3 billion won.
The U.S. tech giant was able to avoid paying higher taxes in Korea by vesting the domestic earnings of its Google Play app store in Google Asia Pacific located in Singapore, where taxes are lower.
The Korea Mobile Internet Business Association estimated Google Play's revenue in Korea to be around 5 trillion won in 2019, although a Google Korea executive told lawmakers at a National Assembly audit in 2020 that the app store's revenue here would have been around 1.4 trillion won.
"We make our profits mainly from ads on the Google website," Google Korea said in its regulatory filing, adding that it also earns money through marketing and R&D services, as well as from selling hardware such as Chromecast devices. Netflix Vice President of Public Policy Dean Garfield speaks to journalists during a press conference at JW Marriot Hotel in Seoul in this November 2021 file photo. Yonhap
Netflix Services Korea, which saw its sales rise last year by 52 percent year on year to 631.7 billion won, paid only 2.7 billion won in corporate taxes here in 2021, by having its operating profit stand at 17.1 billion won after sending 516.6 billion won to its parent company as a "distribution fee."
"According to the distribution agreement, we serve as a distributor of Netflix's services in Korea," Netflix Services Korea said in its regulatory filing. "We pay a distribution fee to Netflix in accordance with the agreement."
In January, Apple Korea faced criticism when its annual business performance, which had been disclosed for the first time in 12 years, showed that it paid only 62.8 billion won in corporate taxes last year, despite its sales reaching up to 7.1 trillion won.
Apple Korea enabled its 2021 operating profit to stand at 111.4 billion won, by paying over 6 trillion won to Apple South Asia for the Korean unit's imports from the Singaporean unit.
"Given that earnings of global enterprises in Korea have increased significantly, they should increase investments, employments and social contributions here, rather than understating their operating profits to avoid taxes," independent lawmaker Yang Jung-suk said earlier this year.
Data given by the National Tax Service (NTS) last October to Rep. Yong Hye-in of the minor opposition Basic Income Party showed that local subsidiaries of 19 multinational IT firms paid 153.9 billion won collectively in corporate taxes in 2020 ― only 35.8 percent of the amount paid by Naver.
The 19 companies were Google, Microsoft, Amazon, Facebook, Apple, AT&T, Verizon Communications, SAP, PayPal, Qualcomm, Hewlett-Packard, Netflix, VMware, Adobe, eBay, Oracle, Alibaba, Disney and Cisco.
"If global firms transfer their earnings in Korea to other countries to pay smaller amounts of corporate taxes here, Korean companies could suffer from unfair competition," said Park Byung-jin, a business professor at Hanyang University.
Both Google and Netflix also objected to the NTS' order last year to pay an additional 600 billion won and 80 billion won in taxes, respectively.
The tax agency has remained silent about its measures against each company, but it has reportedly sought to legalize its access to the computer networks of multinational firms that are unsupportive of its tax investigations, according to industry officials.
In addition, the Korean government is set to start imposing what it calls a "digital tax" next year on global firms making handsome profits here, in accordance with an agreement among OECD and G20 member nations.