By Kang Shin-who
Staff Reporter

Korean tax authorities are reviewing the non-taxable status of ETS, or Educational Testing Service, the American provider of the TOEFL and TOEIC tests.

If it is determined that this status is not justified, the National Tax Service (NTS) said the nonprofit organization will be subject to retroactive taxation on income from TOEFL tests that have so far remained untaxed since 2007, when ETS established what is viewed to be a permanent office here.

A director of the NTS, who is looking into ETS Korea, told The Korea Times, Tuesday that it could levy taxes on the test maker.

"We are still examining activities and business of the organization," he said.

Regarding valued added tax (VAT), he said ETS's claims are wrong. In an earlier email to The Korea Times, the test provider said they were not required to collect VAT from test takers for the TOEFL and GRE programs as they are used by international universities outside Korea, although the tests are used by Korean universities and corporations as well.

Asked several times about reasons for the tax exemption, ETS has remained silent.

ETS has the largest market share in Korea for the TOEFL test with 600,000 applicants over the past five years, but has not paid any tax. After several arguments over the shortage of testing sites and Internet system errors, ETS opened a Seoul office in 2007 and introduced scholarship programs saying, "We really want to pay back what we have received from Koreans."

In the case of the organizer of the British English proficiency test, IELTS, the IDP Education Korea pays corporate taxes and VAT. IELTS, created by the University of Cambridge, has six times fewer applicants than TOEFL in Korea, but it has more test takers than the American test around the world.

kswho@koreatimes.co.kr