Abolition of Reverse Discrimination
The European Union imposed on Google an anti-trust fine of 2.42 billion euros (approximately 3 trillion won), the largest one of its kind ever, on June 27, Under the circumstances, the Korea Fair Trade Commission (KFTC) and the National Tax Service (NTS) of Korea are expected to follow suit with regard to global IT giants.
At present, those IT companies such as Google and Facebook have no server in South Korea and are evading taxes in the country for the reason. Besides, they do not have to submit specific data on the sales and operating profits they report because they take the form of limited liability companies in the country.
In this regard, People’s Party lawmaker Oh Se-jung recently introduced a new bill so that the South Korean government can look into competition among firms doing telecom business by borrowing local mobile carriers’ networks. According to the bill, those firms have to submit detailed data on their market shares, sales and so on to the government. The targets of the bill include global IT giants as well as their South Korean counterparts like Naver.
In the meantime, the KFTC and the NTS are focusing on their unfair business practices and tax evasion. “We are looking to put restrictions on their unfair practices such as information monopoly,” KFTC Chairman Kim Sang-jo said in a recent interview, adding, “Their monopoly is problematic in that the networks they use are based on taxpayers’ money and they are using the networks without paying anything.”
NTS Commissioner Han Seung-hee has mentioned that he would look more closely into tax evasion by multinational corporations in cooperation with the OECD. The NTS recently imposed a corporate tax of approximately 300 billion won on Oracle for having hidden about two trillion won in profit by using a tax haven. From next year onwards, multinational corporations in South Korea have to submit integrated reports on their international transactions.
The Ministry of Strategy & Finance of South Korea signed a multinational agreement in June last year to exchange such reports with OECD member countries. On June 22 this year, it signed the same agreement with the U.S. government, which did not take part in the signing of the multinational agreement. “The agreement with the U.S. will become effective next year, and then offshore tax evasion by multinational corporations will be blocked more effectively,” the ministry explained.