Tax Income Sources
Foreign companies operating in South Korea accounted for nearly 14 percent of the country’s overall corporate tax income in 2015.
According to the data from the National Tax Service (NTS) on January 8, 10,220 foreign firms operated business in South Korea as of 2015. The figure was 2.1 times higher than 4,969 in 2000.
The number of multinational companies which were headquartered in other countries and had their offices in South Korea increased from 1147 to 1840, and the number of foreign investment firms which invested more than 10 percent of its shares in South Korea for the purpose of business without domestic offices grew from 3,822 to 8,380.
The ratio of foreign companies to the county’s 673,374 companies at the end of 2015 stood at 1.5 percent. However, the figure drastically expanded in terms of earnings and corporate tax. In fact, multinational firms earned a combined 664 trillion won (US$554.95 billion) and paid a total of 5.3 trillion won (US$4.43 billion) in corporate tax in 2015. Their earnings accounted for 14.9 percent of the nation‘s overall corporate earnings worth 4,468 trillion won (US$3.73 trillion) and their corporate taxes marked 13.6 percent of total corporate taxes valued at 39 trillion won (US$32.6 billion) in the same year.
The average income and corporate taxes paid by per foreign company also surpassed those of domestic ones. The average earnings of foreign firms and foreign investment companies reached 97.14 billion won (US$81.19 million) and 61.49 billion won (US$51.39 million), which were 14.9 times and 9.4 times higher than domestic companies with 6.54 billion won (US$5.47 million).
The average corporate taxes paid by multinational firms and multinational investment firms stood at 303 million won (US$253,239) and 580 million won (US$484,747), which were 5.1 times and 9.8 times higher than domestic firms with 59 million won (US$49,310).
An NTS official said, “Since foreign firms operating here are relatively bigger than domestic ones in terms of size, the size of their individual income and taxes often exceeds that of local companies.”
By country, U.S. companies accounted for 22.9 percent, or 421, of the country’s foreign companies operating in South Korea, followed by Japan with 21.7 percent, or 399, Hong Kong with 9 percent, or 166, Singapore with 8.6 percent, or 158, and China with 6.3 percent, or 116.