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| Minister of Science and ICT Lim Hye-sook speaks during her first press conference at the ministry building in Sejong, Monday. Courtesy of Ministry of Science and ICT |
By Kim Bo-eun
Korea's ICT minister on Monday welcomed the global movement to implement a "digital tax" and vowed support for the tax being collected from global platform giants such as Google and Netflix.
"Imposing a tax on overseas platform businesses such as Google and Netflix is fine," Science and ICT Minister Lim Hye-sook told reporters at the ministry building in Sejong. "But we need to think about exporting firms such as Samsung and SK hynix being taxed overseas."
The minister's position comes at a time when countries around the world are pushing ahead with setting up a new framework to reform international taxation rules so as to ensure that multinational companies pay a fair percentage of tax wherever they operate. The taxation plan is set to be finalized in October, as a number of countries are against the move. Implementation is set to begin in 2023.
These initiatives are intended to ensure a fairer distribution of profits and taxing rights among countries with respect to the largest global firms, including digital companies. This fairer distribution will be done by reallocating some taxing rights over the global companies from their home countries to markets where they are active and earn profits.
Under the outline, multinational firms with a global turnover of $23.7 billion and a profit margin above 10 percent will have to pay part of their corporate taxes to markets where they have business operations and earn profits. This requirement intends to address issues concerning companies' practice of transferring their profits to countries or territories with low corporate tax rates. Projections are that Samsung Electronics and SK hynix will be subject to these new taxation rules as well.
"We will specify a strategy when details of the plan come out, such as which firms are subject to the tax and the amount of tax they will need to pay," the minister said.
Lim said that the ministry will keep an eye on developments specifically regarding a recent court ruling against Netflix in a network usage fee dispute with local network operator SK Broadband.
The Seoul Central District Court last month dismissed a request by Netflix to confirm that the U.S.-based video streaming service provider is not liable to pay to use SK Broadband's network.
Netflix filed the suit against SK Broadband after the latter demanded that the U.S. firm share in the costs of upgrading its network, so as to accommodate heavy data traffic resulting from the popularity of Netflix's services.
"The results of the lower court ruling have come out, and we will need to see whether any follow-up measures will be taken," the minister said.
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