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Oracle Charged $293M In South Korean Back Taxes (thestack.com)

Posted by EditorDavid on from the reversal-of-revenue dept.

An anonymous reader quotes The Stack: Multinational tech giant Oracle has been charged $293 million USD for corporate tax evasion in South Korea. The $293 million charge is made up of back taxes, as well as a punitive charge from the government tax agency. The company was originally notified of the tax debt in January of last year, when the National Tax Service charged Oracle with evasion of corporate tax payments on 2 trillion won in earnings from 2008-2014.

Oracle was accused of funneling revenues to Ireland to avoid paying taxes in South Korea. In an audit of the company's books, the tax authority found that Oracle had channeled profits generated in South Korea to an Irish subsidiary; however, it was found that those funds ultimately profited the company's headquarters in the United States. Because of this, the NTS determined that Oracle should have paid taxes on profits generated in South Korea to the South Korean government.

19 comments

  1. Good for them! by Notabadguy · · Score: 1

    Now enforce it and set an example.

    1. Re: Good for them! by Anonymous Coward · · Score: 0

      How? How can this be enforced?

      What if Oracle simply says, "we're not paying"? What can even be done? Sure, they may have to close their offices in and be banned from doing business in South Korea, but I doubt those offices and business profits them more than $293 million to make it worth it (maybe long term, but remember, businesses generally only think short term, to please their shareholders).

      Of course, the case will probably be appealed and held up in court for years, but thats irrelevant. I'm really curious how South Korea could enforce this, and not only because I hate Oracle and would love to see them pay up lol, but just for the sake of international business law.

    2. Re: Good for them! by Notabadguy · · Score: 4, Informative

      How? How can this be enforced?

      What if Oracle simply says, "we're not paying"? What can even be done? Sure, they may have to close their offices in and be banned from doing business in South Korea, but I doubt those offices and business profits them more than $293 million to make it worth it (maybe long term, but remember, businesses generally only think short term, to please their shareholders).

      Of course, the case will probably be appealed and held up in court for years, but thats irrelevant. I'm really curious how South Korea could enforce this, and not only because I hate Oracle and would love to see them pay up lol, but just for the sake of international business law.

      Are you serious?

      1. It was appealed and upheld.
      2. Oracle sued in South Korea's highest court and the verdict was upheld.
      3. There's no where else for them to appeal to.

      And if you think Oracle will close up shop in South Korea over $293m in back taxes, I don't think you understand how taxes work. That's a portion of their profit. Closing up shop in South Korea would remove that portion of their profit, the rest of their profit, and all the REVENUE from the South Korean market.

    3. Re: Good for them! by Anonymous Coward · · Score: 0

      Sadly it's probably like the UK. "O were owed X amount" then a few dinners with the right people it's forgotten about.

      Disgusting in my opinion.

    4. Re: Good for them! by Anonymous Coward · · Score: 1

      Of course they profit more than that if that's how they generated the tax debt in the first place!

    5. Re: Good for them! by Anonymous Coward · · Score: 0

      No worries, I sense a free 2 year ULA in the offing.

    6. Re: Good for them! by Anonymous Coward · · Score: 0

      Leveeing taxes on corporations may just result in higher prices. Are tax evasions priced in? A level playing field is important, and limits on executive compensation would be good.
      Half a billion dollar bonus makes no sense.

  2. ok, that's some seriously funny math in S Korea... by Anonymous Coward · · Score: 0

    Their Gross Domestic Product total is only 1.3 trillion. Spread over 6 years is 7.8 trillion.

    That means that 1/4th of South Korea's ENTIRE domestic product output was channeled into Oracle sales? Yeah, I don't think so. Oracle doesn't even make that much world-wide (gross revenue world-wide was 37 billion in 2012 and 2013, so spread across 6 that's no more than 225 billion).

    So the idea that Oracle sold 2 Trillion in South Korea alone is absolutely ludicrous.

  3. Re:ok, that's some seriously funny math in S Korea by Anonymous Coward · · Score: 0

    That is, unless the article (or South Korea) is having some serious currency conversion issues.

  4. Re: ok, that's some seriously funny math in S Kore by Anonymous Coward · · Score: 0

    Get your currencies straight. The numbers quoted in the article are in won, not dollars.

  5. Slashdot gets it wrong as usual by Anonymous Coward · · Score: 0

    The real title should be "Oracle charges South Koreans 293M in Back Tithes" to pay the judgment.

  6. Re: ok, that's some seriously funny math in S Kore by Entrope · · Score: 1

    You're off by about the orders of magnitude. The numbers I found say their GDP is 1.3-some trillion USD, or 1.5-some quadrillion won.

  7. Who will win the abuse contest? by Anonymous Coward · · Score: 0

    Microsoft, Oracle, Adobe Systems, and others are having a contest to see who can be most abusive.

    Eventually, they will all come to where you work and drag you away, like United Airlines.

  8. Re:ok, that's some seriously funny math in S Korea by r1348 · · Score: 1

    Apparently, not the whole world uses dollars.

  9. Re:ok, that's some seriously funny math in S Korea by Anonymous Coward · · Score: 0

    The whole world already uses bitcoins. The problem is that selling oil in bitcoins is the fastest way to get things thrown at you, exploding things. So we keep using dollars for trading oil, and then try to trade these dollars for something we actually need.

  10. This doesn't make any sense by bluefoxlucid · · Score: 1

    South Korea finds Oracle funneled revenues to Ireland, but those revenues actually should have gone to the United States HQ. South Korea thus decides Oracle owes SK taxes.

    ... if those revenues were not taxed because they were booked as taken in Ireland, and they're actually taken in the United States, doesn't that mean Oracle owes the United States money and owes South Korea nothing?

    --
    Support my political activism on Patreon.
    1. Re:This doesn't make any sense by Anonymous Coward · · Score: 0

      Two options I can think of:

      • 1. Ireland and SK have a different tax sharing agreement that USA and SK. So Oracle moved it's profit through Ireland to the USA in an effort to circumvent the tax agreement. So if the tax agreement was USA-SK 10%, Ireland-SK 0%, USA-Ireland 5%, then by moving their money to the USA via Ireland they've saved 5%. Which would be fine if it was legal, but there are heaps of laws against just that sort of thing (though less against corporations than there are against individuals - I almost learned this the hard way a few years ago, which is why I've checked the "Post Anonymously" checkbox.)
      • 2. Oracle claimed it was paying it's head office in Ireland for services rendered, which is how the movie industry does it as well and is mostly legal as long as you're careful. Then Ireland pays the USA office for services rendered, again legal if you're careful. However if you're not careful and the courts determine there were no services rendered, then you're in an awful lot of trouble.

      In a lot of places corporations and individuals can get out of this trouble by essentially splitting the fine. You drag out the legal proceedings as you "donate" to the correct politicians and get exceptions written into the laws. Then you go to mediation and agree to pay 1/10 of the original fine. In the end the politicians got "donations" so they're happy; the courts "won", so they're happy; the public sees that you paid a fine so they're hapy; and you've limited the amount you paid to perhaps 50% of the original fine, so you're happy.