Google to have “contributed KRW 17 trillion GDP of Korea”… Tax avoidance report in controversy
Kim Soo Yeon | newsnews@ | 2017-08-23 14:12:19
Korea is the first country for Google to publish a report that quantifies the contribution of the domestic industry through building an ecosystem. Recently, it seems difficult to avoid pointing out that Google is promoting the positive effects of multinational corporations and the controversy over tax evasion.
Google Korea held a press conference in Daechi-dong, Seoul, Korea, on August 22, and presented a report on the economic impact of Android open ecosystem on Korea, written by business strategy consulting firm Alphabeta
Open Android ecosystem △ Reduced development time of Korean manufacturers by 100 △ Reduced development time of 30% per application by Korean app developers △ Created and expanded business, created jobs and competition and Increased annual GDP growth of up to KRW 17 trillion by promoting innovation △ Consumer And the effect of offering a value of KRW 4.5 trillion per year (KRW 150 thousand per person). This report has been published in some countries in Asia Pacific including Japan, but this is the first time in Korea.
The Internet industry is paying attention to why Google is releasing this report right now. Especially, this announcement seems to be a movement that considers the Korean government, which is raising the pressure level on foreign companies, by investigating the problem of discrimination against domestic companies throughout the industry. It is argued that it is trying to alleviate domestic public criticism of Google over tax avoidance and market dominance abuses.
An Internet industry expert said, "While the positive impact of the Android ecosystem on our industry is clear, we must see whether it has a dominant market position in the domestic market, The FTC has taken out a knife because it is not doing its part properly, and the announcement of Google seems to be aimed not at unintentional but at dominating domestic opinion."
Kim Sang-joo, chairman of the Fair Trade Commission, said last month that "global IT companies like Google and Apple are considering ways to regulate market dominance." The former President Moon has promised to look into the problem of reverse discrimination such as taxation of foreign companies during his candidacy, and the problem of reverse discrimination including `Google tax` is expected to become an issue throughout the government`s term.
Google Play, which is responsible for Google`s platform business, accounts for 58.2% of the domestic app market (based on content sales in 2016, 26.4% of Apple App Store), according to the Korea Wireless Internet Industry Association. With Google Play, last year`s sales in Korea were close to KRW 4.5 trillion, and the fee income from app developers is estimated at KRW 1.33 trillion. Google takes 30% of Google Play sales as a commission and distributes the rest to app developers. However, the company does not pay taxes on profits and is considered as a representative Tax Evasion Company. Currently, Google is registered as a limited company with no sales or other financial information disclosure in Korea, so it is difficult to collect taxes on profit under the current law.
Especially, it is pointed out by the industry that foreign content platforms of domestic content companies are deepening and market distortions are serious due to the fixation of `sit and make money` through Google Play Market Commission. Domestic developers say it is difficult to switch to other platforms even if they are dissatisfied with the 30% fee. "This is why we are deprived of the economic choice of the app providers and Google is being cited as the main reason for distorting the market," an industry official said. He said.
Meanwhile, Google is not free from the controversy over market dominance abuse such as its service (search, etc.) being installed on Android phone, creating local service and unfair competition environment. The European Union (EU) has decided to impose a charge of three trillion won (USD 3 billion) on Google for alleged unfair trade, saying it abused its dominance in the search services market.
On the other hand, at the end of last year, the amendment bill of the International Tax Adjustment Law of the Ministry of Finance and Economy will be passed through the National Assembly plenary session and a foundation will be laid to prevent multinational corporations from avoiding taxes. The amendment requires a multinational corporation to submit a national report that states the sales and tax payment status of each local corporation to the Accounting Department (a nonpayment fine of 30 million won). However, there is a problem that the corporation tax law has to be revised because only companies with domestic fixed business sites (servers, etc.) are required to pay taxes.
By Kim Soo Yeon newsnews@
[ copyright ⓒ The Digitaltimes ]
Google Korea held a press conference in Daechi-dong, Seoul, Korea, on August 22, and presented a report on the economic impact of Android open ecosystem on Korea, written by business strategy consulting firm Alphabeta
Open Android ecosystem △ Reduced development time of Korean manufacturers by 100 △ Reduced development time of 30% per application by Korean app developers △ Created and expanded business, created jobs and competition and Increased annual GDP growth of up to KRW 17 trillion by promoting innovation △ Consumer And the effect of offering a value of KRW 4.5 trillion per year (KRW 150 thousand per person). This report has been published in some countries in Asia Pacific including Japan, but this is the first time in Korea.
The Internet industry is paying attention to why Google is releasing this report right now. Especially, this announcement seems to be a movement that considers the Korean government, which is raising the pressure level on foreign companies, by investigating the problem of discrimination against domestic companies throughout the industry. It is argued that it is trying to alleviate domestic public criticism of Google over tax avoidance and market dominance abuses.
An Internet industry expert said, "While the positive impact of the Android ecosystem on our industry is clear, we must see whether it has a dominant market position in the domestic market, The FTC has taken out a knife because it is not doing its part properly, and the announcement of Google seems to be aimed not at unintentional but at dominating domestic opinion."
Kim Sang-joo, chairman of the Fair Trade Commission, said last month that "global IT companies like Google and Apple are considering ways to regulate market dominance." The former President Moon has promised to look into the problem of reverse discrimination such as taxation of foreign companies during his candidacy, and the problem of reverse discrimination including `Google tax` is expected to become an issue throughout the government`s term.
Google Play, which is responsible for Google`s platform business, accounts for 58.2% of the domestic app market (based on content sales in 2016, 26.4% of Apple App Store), according to the Korea Wireless Internet Industry Association. With Google Play, last year`s sales in Korea were close to KRW 4.5 trillion, and the fee income from app developers is estimated at KRW 1.33 trillion. Google takes 30% of Google Play sales as a commission and distributes the rest to app developers. However, the company does not pay taxes on profits and is considered as a representative Tax Evasion Company. Currently, Google is registered as a limited company with no sales or other financial information disclosure in Korea, so it is difficult to collect taxes on profit under the current law.
Especially, it is pointed out by the industry that foreign content platforms of domestic content companies are deepening and market distortions are serious due to the fixation of `sit and make money` through Google Play Market Commission. Domestic developers say it is difficult to switch to other platforms even if they are dissatisfied with the 30% fee. "This is why we are deprived of the economic choice of the app providers and Google is being cited as the main reason for distorting the market," an industry official said. He said.
Meanwhile, Google is not free from the controversy over market dominance abuse such as its service (search, etc.) being installed on Android phone, creating local service and unfair competition environment. The European Union (EU) has decided to impose a charge of three trillion won (USD 3 billion) on Google for alleged unfair trade, saying it abused its dominance in the search services market.
On the other hand, at the end of last year, the amendment bill of the International Tax Adjustment Law of the Ministry of Finance and Economy will be passed through the National Assembly plenary session and a foundation will be laid to prevent multinational corporations from avoiding taxes. The amendment requires a multinational corporation to submit a national report that states the sales and tax payment status of each local corporation to the Accounting Department (a nonpayment fine of 30 million won). However, there is a problem that the corporation tax law has to be revised because only companies with domestic fixed business sites (servers, etc.) are required to pay taxes.
By Kim Soo Yeon newsnews@