Apple called on to pay W55 bil. in corporate taxes

The Korea Times

The Korea Times

Business

Sat, December 9, 2023 | 04:40

Tech

Apple called on to pay W55 bil. in corporate taxes

Posted : 2021-10-05 17:09

Updated : 2021-10-05 17:33

Apple's logo is seen on an Apple Store in New York / AP-Yonhap

Regulator chief vows to supervise platform firms

By Kim Bo-eun

A lawmaker is claiming that U.S. tech giant Apple's local subsidiary should pay up to 55 billion won in corporate taxes from iPhone advertising costs it forced on local mobile carriers.

According to Rep. Jang Hye-young of the social democratic minor opposition Justice Party, Tuesday, Apple is estimated to be required to pay 36.6 to 55 billion won in corporate taxes for advertising costs it made telecom service providers pay for. The figures were calculated by accounting experts based on data from the Korea Fair Trade Commission.

The industry estimates that the costs Apple Korea made local mobile carriers pay amount to 20 to 30 billion won, for which Apple needs to pay 28.8 billion to 43.2 billion won in corporate taxes. But the total amount of corporate taxes the company should pay comes to 36.6 billion to 55 billion won when including additional taxes that have been imposed for failing to report the corporate taxes that it is required to pay.

According to local regulations, when a company receives funds for an advertisement, it needs to record them under "gains from assets contributed" and pay corporate taxes on these gains.

Apple Korea sent invoices calling for the telecom firms to pay for iPhone and iPad advertising costs and made the companies produce the advertisements. The tech firm also made them pay for the costs of repairing iPhones and iPads.

Rep. Jang said that the amount of corporate taxes Apple's local subsidiary needs to pay will be greater when adding up the repair costs telecom companies were forced to bear.

"Apple Korea has been investigated by the Korea Fair Trade Commission for unfair practices against local mobile carriers, and the National Tax Service needs to collect the corporate tax Apple Korea did not pay through inspections, amid these circumstances in which the company has made gains," Rep. Jang was cited as saying.

"Taxes should be imposed on the company for gains made from passing promotional expenses onto partner firms via having abused its dominant status in business relations."

Korea's antitrust regulator in 2016 initiated an investigation into Apple Korea for passing on advertisement and repair costs to telecom companies.

In February, Apple finalized a plan to make 100 billion won in contributions to society by setting up an R&D center for small-and medium-sized enterprises and establishing a developers' academy to foster talent.

Korea Communications Commission Chairman Han Sang-hyuk speaks at the National Assembly's audit of the agency, at the Assembly in Yeouido, Seoul, Tuesday. Yonhap

"Apple already dealt with the issue. It drew up a plan and is following through with it," an industry source said. Apple and telecom firms declined to comment on whether the smartphone vendor stopped asking for advertising costs to be paid.

Korea Communications Commission (KCC) Chairman Han Sang-hyuk, meanwhile, vowed to set up regulations for big tech platform companies such as Google and Apple.

"We will seek to set up online platform-related regulations to ensure fair market competition and protect users," Han said at a National Assembly audit of his agency, Tuesday.

These remarks come after regulations were revised in August to ban Google's and Apple's app stores from forcing app developers into using the app store's payment system. Han said that the agency would have details of the revised regulations laid out so that they could be enforced without delay.

The KCC chief also said that the agency is communicating with Google and Apple on conforming to these revisions and pledged to ensure that app developers are notified of the latest changes to the law.

bkim@koreatimes.co.kr