According to the Federation of Korean Industries (FKI), 186 companies answered to the Base Erosion and Profit Shifting (BEPS) Response Support Center’s recent survey on the awareness of the so-called Google tax of the 600 largest South Korean enterprises in terms of sales and 81% of the companies that answered to the survey said that they were not familiar with the new tax or were aware of nothing but the purpose of the tax. The BEPS Response Support Center was recently established by the FKI, the Ministry of Strategy & Finance and the Korea Institute of Public Finance.
In its additional survey, about 50% and 20% of the 108 respondents that are required to submit the combined report of international transactions, which was brought into effect last year, answered that they would make preparations in the future and were consulting external experts with regard to BEPS, respectively. The results of the surveys show that South Korean enterprises are making little preparation with respect to BEPS.
“At present, these companies are recording high overseas sales ratios while an increasing number of countries are moving to introduce laws related to BEPS, which means they are likely to face difficulties resulting from a change in the international taxation environment,” the FKI explained, adding, “In addition, the submission of country-by-country reports regarding transfer prices are being forced by law in more and more countries and regulations on offshore tax evasion are being strengthened in the same context, signaling an increase in the tax burden on the part of South Korean companies in source countries.”
In the meantime, half of the 108 companies mentioned the shortage of systems and personnel as their biggest concerns regarding the duty of submitting the combined report of international transactions implemented from this year. 20% answered that too much information and data are required to be submitted while 80% said the due date of the submission, 90 days after the end of a business year as is the case with the corporate tax return due date, is too early.