By Choi Kyong-ae
Korea is considering introducing a so-called "Google tax," which would involve imposing taxes on applications sold by such multinational tech giants as Google and Apple, the Ministry of Strategy and Finance said Wednesday.
"The move is aimed at collecting corporate taxes from those multinational companies for their transactions with Koreans made on mobile and other electronic devices. Exactly when to implement the Google tax has yet to be fixed, but discussions are underway," a ministry official said without elaborating.
Korea's consideration of the Google tax came after the Organization for Economic Cooperation and Development (OECD) released its final report on Monday in Paris on how to crack down on international tax avoidance.
The OECD is seeking to counter the use of tax havens and other strategies by companies such as Google, Apple and Starbucks. Multinational enterprises have employed aggressive tax-dodging techniques which the OECD says cost the world as much as $240 billion a year in lost tax revenue.
The OECD's blueprint — known by the acronym BEPS, for "base erosion and profit shifting" — would limit strategies that companies use to avoid taxes, such as assigning valuable patent rights to paper companies based in tax havens such as Bermuda or the Cayman Islands, or getting interest deductions for payments made to their own affiliates.
"Globally, 60 to 80 countries have shown interest in adopting the BEPS Action Plan to help beef up their tax revenue from multinational companies. Annual BEPS-related tax losses likely reached 4 to 10 percent, or $100 billion to $240 billion, of the overall tax income from multinational firms in 2014," the ministry official said.
In Korea, multinational companies such as Google and Apple have sold their content and applications to local customers through mobile devices. But they have not paid corporate taxes for their sales here as they are not obliged to, according to Shim Jae-chul, a policymaker of the ruling Saenuri Party.
The domestic wireless content and application market reached 2.43 trillion won in 2013, and the market grew by an average of 18 percent a year during the 2011 to 2013 period, Shim said in a statement released Tuesday.
"The government should revise the related law as quickly as possible to impose taxes on any transactions between the multinational open market operators and Korean customers," he said.
The Park Geun-hye government has stepped up its drive to boost tax revenue by bringing the underground, or shadow, economy into the open for taxation since taking power in early 2013. It has also made efforts to curb tax-evasion by individuals and companies.
Korea is considering introducing a so-called "Google tax," which would involve imposing taxes on applications sold by such multinational tech giants as Google and Apple, the Ministry of Strategy and Finance said Wednesday.
"The move is aimed at collecting corporate taxes from those multinational companies for their transactions with Koreans made on mobile and other electronic devices. Exactly when to implement the Google tax has yet to be fixed, but discussions are underway," a ministry official said without elaborating.
Korea's consideration of the Google tax came after the Organization for Economic Cooperation and Development (OECD) released its final report on Monday in Paris on how to crack down on international tax avoidance.
The OECD is seeking to counter the use of tax havens and other strategies by companies such as Google, Apple and Starbucks. Multinational enterprises have employed aggressive tax-dodging techniques which the OECD says cost the world as much as $240 billion a year in lost tax revenue.
The OECD's blueprint — known by the acronym BEPS, for "base erosion and profit shifting" — would limit strategies that companies use to avoid taxes, such as assigning valuable patent rights to paper companies based in tax havens such as Bermuda or the Cayman Islands, or getting interest deductions for payments made to their own affiliates.
"Globally, 60 to 80 countries have shown interest in adopting the BEPS Action Plan to help beef up their tax revenue from multinational companies. Annual BEPS-related tax losses likely reached 4 to 10 percent, or $100 billion to $240 billion, of the overall tax income from multinational firms in 2014," the ministry official said.
In Korea, multinational companies such as Google and Apple have sold their content and applications to local customers through mobile devices. But they have not paid corporate taxes for their sales here as they are not obliged to, according to Shim Jae-chul, a policymaker of the ruling Saenuri Party.
The domestic wireless content and application market reached 2.43 trillion won in 2013, and the market grew by an average of 18 percent a year during the 2011 to 2013 period, Shim said in a statement released Tuesday.
"The government should revise the related law as quickly as possible to impose taxes on any transactions between the multinational open market operators and Korean customers," he said.
The Park Geun-hye government has stepped up its drive to boost tax revenue by bringing the underground, or shadow, economy into the open for taxation since taking power in early 2013. It has also made efforts to curb tax-evasion by individuals and companies.
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