Gov't urged to get tougher on Apple, Google

By Lee Min-hyung

The Korean government faces mounting calls to mimic the European Commission (EC) which ordered Apple to pay record-high back taxes.

The European watchdog on Tuesday ordered the iPhone maker to pay $14.5 billion (16.17 trillion won) in back taxes, as the company is suspected of receiving preferential tax benefits from the government of Ireland for its business in Europe.

Officials here said the EC decision should come as alarm bells for its Korean counterpart, as some global IT giants _ including Apple and Google _ have been at the center of controversies over their suspected tax dodging here.

Critics say the government has taken too passive and lenient an approach toward globally renowned tech giants due to concerns over the consequences that such sanctions would have on the nation’s economy.

“The nation’s watchdogs have so far failed to collect taxes accordingly from such global IT giants, as they are not fully bound by Korean law in their business operations here,” said an official from a major electronics company. “The government needs to be stricter on the companies just like the EC was.”

Still, most industry officials are doubtful about the government shifting its stance toward the tech giants.

“To be honest, it would be almost impossible for the Korean government to shift their stance on such globally dominating firms, given their massive impact on the nation’s economy,” another IT company official said.

He cited the nation’s heavy reliance on the mobile industry as the key reason.

“The Korean economy depends largely on mobile-related industries,” he said. “In case the government imposes any hefty penalty on iOS and Android operators, the aftermath would be massive. Even if the government collects more taxes from the tech giants, it does more harm than good once the two companies shift their policies on the Korean market as a retaliatory action.”

Korea is famous for its widespread telecommunication and mobile infrastructure, but the one-sided development can sometimes be poisonous as well, he said.

“In particular, Android devices take up more than 90 percent of the smartphone market in Korea, which translates into the fact that Korea is relying massively on Google,” he said.

“For Apple, Korea is not that profitable a market compared to other Asian powerhouses including China and Japan. If the government imposes tough sanctions on Apple, the company may choose to withdraw its Korean business. This will put a damper on the nation’s economy.”