Taxes on OTT Service Providers Promoted
The Ministry of Science and ICT entrusted a project to the Korea Legislation Research Institute with regard to the current status of digital taxes such as the so-called YouTube tax and whether the taxes are applicable to the South Korean market. The South Korean government is planning to compel over-the-top (OTT) service providers such as Netflix and YouTube to make a payment into the Broadcasting and Communications Development Fund.
South Korean terrestrial broadcasting companies, general programming channels and news channels have made the same payment each year. This year, the payment is equivalent to 2 percent to 4 percent of their ad sales. These days, more and more demands for advertisements are being shifted from broadcasting media toward the OTT market and those in the local broadcasting sector are saying that the OTT service providers have to share the burden.
In this regard, Democratic Party of Korea lawmaker Byeon Jae-il tabled an amendment to the Framework Act on Broadcasting Communications Development in October last year and the bill is currently pending in the competent standing committee. The entrusted research project is to determine whether the burden can be put on the foreign companies.
Recently, the Science, ICT, Broadcasting, and Communications Committee of the National Assembly said that France revised its tax laws to that end in September 2017 and Germany is following suit by using its film promotion fund DFFF.
“Still, reverse discrimination against South Korean service providers will be exacerbated unless executability is ensured in relation to the global players dominating the local OTT service market,” the committee explained, adding, “The adoption of the YouTube tax will fail, only adding to the burden on local OTT service providers, if YouTube, Netflix and so on remain outside the jurisdiction of the local taxation authorities.”