SEOUL, March 22 (Korea Bizwire) – Eight out of ten Korean corporations have been shown to lack understanding of or preparation for the Base Erosion and Profit Shifting (BEPS) project, also known as the ‘Google tax’.
The ‘Google tax’ can be understood from two perspectives. The first purpose of the tax is to protect intellectual property such as news and other content by imposing duties. Another is to collect corporate tax that is often avoided by transferring revenue to countries with lower tax rates as expenses. As corporations end up paying smaller tax sums, the activation of the BEPS project – a.k.a. Google tax – was approved at the G20 summit last year.
The Korean government established an organization to offer support related to the BEPS project to businesses. As its first task, a survey was conducted to see how well Korean businesses understood BEPS. The results revealed that 81 percent of the 186 companies participating in the survey replied that they ‘do not know much’ about the BEPS or ‘only understand the project’s purpose’.
Of note, 57 percent of the corporations required to submit a report on international trade information regarding BEPS (108 companies) answered that ‘they are planning to prepare in the near future’. Only 22 percent received ‘consulting from an external organization’ on the matter.
Government authorities expect that the tax burden for Korean corporations will increase due to the strict regulations targeting countries that were complicit in duty or tax avoidance. Struggles were also expected due to the change in international taxes.
Officials emphasized that since the BEPS is an international project, Korean global corporations should take more aggressive action to prepare for the change.
By M.H.Lee (email@example.com)