Because Google Korea is a limited liability company, it has not made public sales and operating profits generated in South Korea. (image: Korea Bizwire)
SEOUL, Nov. 25 (Korea Bizwire) — The government has accused global tech giant Google Inc. of tax evasion and taking advantage of local game companies.
The National Tax Service (NTS) said Wednesday that it will conduct a tax probe into suspected tax evasion and aggressive tax evasion offshore.
In particular, for the first time, multinational information technology (IT) companies have been selected as targets for investigation, and the NTS pointed out that they are attempting to take advantage of blind spots in tax treaties and tax laws to further improve tax evasion methods.
At issue is whether or not multinational IT companies that do not have “fixed workplaces” in South Korea can be subject to a legitimate level of taxes.
Because Google Korea is a limited liability company, it has not made public sales and operating profits generated in South Korea.
The Fair Trade Commission’s knife tip is also eyeing Google, which was already investigated once in 2016.
It is alleged to have forced Korean gaming companies to “not release games in other app markets” by exploiting the high combined market share of its application market Google Play Store.
Google is also suspected of forcing a smartphone maker to pre-load Google apps onto its devices.
Regarding the government’s simultaneous escalation of its attack toward Google around the same time, academics say that it is “a cornerstone to keep pace with the global discussion of a Google tax.”
The exact name of the Google tax, which is being discussed by the Organization for Economic Cooperation and Development, is “Digital Tax.”
It refers to taxes levied on income that is diverted by multi-national IT companies to countries with low tax rates.
It is estimated that the amount of taxes that Google and other multinational IT companies avoid would amount to between US$100 billion and $240 billion per year.
By the end of 2020, the OECD plans to create a new Digital Tax standards.
D. M. Park (dmpark@koreabizwire.com)
