Reverse discrimination solution among Korean and foreign companies…National Assembly to revise ‘Google Tax’ related law
Jung Yoon Hee | yuni@ | 2017-06-01 10:24:51
There is growing expectation that countermeasures against reverse discrimination with domestic companies will be made, including the introduction of `Google tax` to prevent tax avoidance by multinational corporations such as Google, Apple and Facebook with the start of the new government.
The ICT industry expects that President Moon Jae-in will consider the issue of unnecessary restrictions on foreign companies and reverse discrimination against foreign companies in the presidential election process. Meanwhile, the National Assembly is also pushing for the initiative of related laws.
According to the political sector on May 31, Oh Sae-jong (People`s Party) member of the National Assembly Future Creation Scientific Broadcasting Communication Commission recently announced that the commission is preparing for the initiative to amend the Telecommunications Business Act to include the contents to be reported additional service providers, including Google, YouTube and Facebook.
This is a result of judging that a minimum amount of countermeasures against global operators is needed in the face of the recent user damage caused by the use of the communication network between Facebook and SK broadband. Currently, most of the global companies in Korea are registered as limited companies and make tremendous sales via operating services. However, they are not disclosing their management status or paying Korean taxes properly. Besides, they are avoiding the application of domestic law as they do not have a fixed place of business such as servers in Korea.
A person related to Mr. Oh said, "The bill is being made because it is not aimed at a specific company such as Facebook, but it is necessary to apply it to global companies." He also saud, "Google and other companies are limited liability companies in Korea, and most of them are registered as an additional telecommunications carrier. The specific matters such as the period of reporting of profit should be delegated to the Enforcement Decree and details will be decided after discussion with Ministry of Science, ICT and Future Planning.”
Facebook has required SK Broadband to install a separate cache server last year. However, the negotiations were sluggish due to differences in cost. Although Facebook claimed to use Cache Server free of charge, SK Broadband expressed frustration as Korean Internet companies such as Naver and Daum are paying a network fee of several hundred billion won per year. Since then, SK broadband users have suffered Facebook and Instagram access problems since then. SK broadband claims that Facebook changed its access channel, Facebook, on the other hand, denies it. Currently, the Korea Communications Commission is under the process of reviewing the actual status of the illegal use of Facebook.
In fact, it is not expected to be smooth service until the actual bill passed. The legislation has been steadily initiated at the National Assembly for the introduction of so called ‘Google tax’ in 2014. However, it has been abandoned due to sensitive issues. The revision of the corporate tax law that strengthens the taxation on multinational corporations has been proposed to the Planning and Finance Committee and the Law on External Audit of Corporations (Externality Act) has been initiated by the Treasury Committee in the 20th National Assembly. However, the law has not yet passed even a standing committee.
On the other hand, an amendment to the International Tax Adjustment Law of the Ministry of Strategy and Finance passed the National Assembly plenary session in December last year and it is expected that the so-called ‘Google tax’ will be introduced to prevent the tax evasion of multinationals. The bill is about multinational corporations such as Google to submit national reports to the Ministry of Strategy and Finance. The report by country should be submitted by January 2 of 2018 with a report on sales and tax payment of local corporations in each country. In the case of report submission failure, a related company will be charged a fine of KRW 30 million. The report may be the basis for taxation on sales to multinational limited companies in Korea. However, some argue that the tax law requires companies with domestic fixed-sites (servers, etc.) to pay taxes, so the revision of the Corporate Tax Law should be done together.
By Jung Yoon Hee yuni@
[ copyright ⓒ The Digitaltimes ]
The ICT industry expects that President Moon Jae-in will consider the issue of unnecessary restrictions on foreign companies and reverse discrimination against foreign companies in the presidential election process. Meanwhile, the National Assembly is also pushing for the initiative of related laws.
According to the political sector on May 31, Oh Sae-jong (People`s Party) member of the National Assembly Future Creation Scientific Broadcasting Communication Commission recently announced that the commission is preparing for the initiative to amend the Telecommunications Business Act to include the contents to be reported additional service providers, including Google, YouTube and Facebook.
This is a result of judging that a minimum amount of countermeasures against global operators is needed in the face of the recent user damage caused by the use of the communication network between Facebook and SK broadband. Currently, most of the global companies in Korea are registered as limited companies and make tremendous sales via operating services. However, they are not disclosing their management status or paying Korean taxes properly. Besides, they are avoiding the application of domestic law as they do not have a fixed place of business such as servers in Korea.
A person related to Mr. Oh said, "The bill is being made because it is not aimed at a specific company such as Facebook, but it is necessary to apply it to global companies." He also saud, "Google and other companies are limited liability companies in Korea, and most of them are registered as an additional telecommunications carrier. The specific matters such as the period of reporting of profit should be delegated to the Enforcement Decree and details will be decided after discussion with Ministry of Science, ICT and Future Planning.”
Facebook has required SK Broadband to install a separate cache server last year. However, the negotiations were sluggish due to differences in cost. Although Facebook claimed to use Cache Server free of charge, SK Broadband expressed frustration as Korean Internet companies such as Naver and Daum are paying a network fee of several hundred billion won per year. Since then, SK broadband users have suffered Facebook and Instagram access problems since then. SK broadband claims that Facebook changed its access channel, Facebook, on the other hand, denies it. Currently, the Korea Communications Commission is under the process of reviewing the actual status of the illegal use of Facebook.
In fact, it is not expected to be smooth service until the actual bill passed. The legislation has been steadily initiated at the National Assembly for the introduction of so called ‘Google tax’ in 2014. However, it has been abandoned due to sensitive issues. The revision of the corporate tax law that strengthens the taxation on multinational corporations has been proposed to the Planning and Finance Committee and the Law on External Audit of Corporations (Externality Act) has been initiated by the Treasury Committee in the 20th National Assembly. However, the law has not yet passed even a standing committee.
On the other hand, an amendment to the International Tax Adjustment Law of the Ministry of Strategy and Finance passed the National Assembly plenary session in December last year and it is expected that the so-called ‘Google tax’ will be introduced to prevent the tax evasion of multinationals. The bill is about multinational corporations such as Google to submit national reports to the Ministry of Strategy and Finance. The report by country should be submitted by January 2 of 2018 with a report on sales and tax payment of local corporations in each country. In the case of report submission failure, a related company will be charged a fine of KRW 30 million. The report may be the basis for taxation on sales to multinational limited companies in Korea. However, some argue that the tax law requires companies with domestic fixed-sites (servers, etc.) to pay taxes, so the revision of the Corporate Tax Law should be done together.
By Jung Yoon Hee yuni@