Korea Plans To Tax Google, Apple and Amazon (koreatimes.co.kr)

An anonymous reader quotes a report from the Korea Times: The government will move quickly to impose taxes on Google, Apple, Amazon and other global IT companies. This follows policymakers and lawmakers paying greater attention to growing criticism that the firms earn billions of dollars in sales here annually but pay no taxes. Naver, Kakao and other domestic companies have been complaining for years about "an uneven playing field," arguing their foreign rivals should pay corporate income tax on the revenue they generate in Korea. Under the law, the government is unable to tax global companies as it is not mandatory for them to disclose their sales and operating profit here. The Corporate Tax Act stipulates that global companies must pay taxes when they have fixed places of business in Korea. This law has provided global companies with an excuse to avoid taxes while they expand their businesses rapidly here as their bases are established in other countries such as the United States, China and Ireland. Ahn Jeong-sang, a policy advisor to the ruling Democratic Party of Korea, said: "Under the current law, preliminary or ancillary places of business are not regarded as global companies' offices in Korea, and this has played a role in their tax avoidance. Considering the characteristics of the digital economy, the concept of fixed places of business needs to be expanded so that the government can secure authority to impose taxes on them."

Comments

finally

[jsepeta]

finally Samsung exerts political power over their smartphone rival Apple

Re: It's a republic.

[Anonymous Coward]

Foreign companies might be able to offer artificially low prices due to not having to pay taxes.

US needs to start taxing them

[cmdr_klarg]

No more loopholes to avoid paying. If the revenue was from money gained from sales in the US, then they need to pay US tax accordingly.

Re:US needs to start taxing them

[DogDude]

Why would Congress close tax loopholes when they're getting paid to keep them open?

Re:Good for Korea

[superwiz]

Ok, I'll bite. How does Google use Korea's roads?

Greedy government always wants it's "cut"

[WCMI92]

Always. Hell hath no fury like government denied it's cut.

Re: It's a republic.

[Puls4r]

Except..... this isn't protectionism. This is the same thing the US government goes after domestic companies for when they try to play tax haven games with places with Ireland. Which is why they enacted the whole "pay the taxes you owe overseas then pay the remainder that you owe here".

You clearly don't understand what's going on, so I'm trying to dumb this down to the point you'll get it. Korea is telling companies they need to pay taxes on money they make in Korea, like MANY other countries (including the US) already do....

Re:Local taxes

[Bert64]

Europe and south korea apply VAT to both domestic and international companies products...
Domestic companies then pay further corporation taxes on their profits, while international companies do not.

The loophole is self-inflicted

[Solandri]

Because for some reason people make a distinction between a corporate tax and a sales tax. What is the difference to you between:

• you buy something from a company that costs $100. The company keeps $80, and sends $20 to the government as corporate taxes.
• you buy something from a company that costs $80. The company collects an additional $20 as sales tax, making the final price you pay $100.

If you think about it, they're the same thing. You pay $100, the company gets to keep $80, the government gets $20.

Once you realize that, you realize the entire problem of multi-national corporations dodging taxes is self-inflicted. They can dodge taxes because they have no physical body and thus can exist simultaneously in multiple tax jurisdictions. This allows them to shift "their" money from one jurisdiction to another in a manner which benefits them by allowing them to avoid corporate taxes. So the loophole only exists because we insist on taxing companies.

People, unlike companies, have a physical body and can thus only exist in one tax jurisdiction at a time, meaning they can't dodge taxes this way. So closing the loophole is easy - just set the corporate tax rate to zero and implement it as sales taxes. Once you get over the "I don't want to pay for it, the company should pay for it" misconception (the company pays for it by charging you a higher price, so you're still paying for it), this is a simple problem to solve.