SEJONG, March 27 (Korea Bizwire) — Less than half of foreign-run companies operating in South Korea paid corporate taxes in 2013, data by the country’s tax office showed Friday.
According to the National Tax Service (NTS), there were 1,601 companies subject to corporate taxes at the end of 2013, but only 48 percent of the businesses, or 769, actually paid the taxes, citing net losses or exemptions from various deductions and tax breaks.
Of the total, 709 reported combined losses of 643.6 billion won (US$582.4 million) during that year, exempting them from taxes. Profits generated by the remaining 892 stood at 4.03 trillion won, records showed.
During the same one-year period, 516,204 South Korean companies were required to pay corporate taxes, with 52.9 percent, or 273,361, doing so.
“One of the reasons why many foreign companies were exempted is because quite a few are liaison offices that do not conduct business, with others being relatively small operations,” the NTS said.
It added that many foreign-owned companies were in the service sector that do not generate the kind of value-added profits to make them eligible for taxation.
Data showed 54.2 percent of all foreign companies were in the service sector with 27.1 percent in the wholesale business. Only 3.3 percent were in manufacturing and slightly more in logistics and warehouse operations.
The NTS, however, said that of the 769 foreign companies that paid their dues, the tax total reached 951.6 billion won, a sharp increase of 23.6 percent from 769.4 billion won tallied the year before.
The latest findings showed that 555 foreign companies that paid taxes were located in Seoul, with 108 in the surrounding Gyeonggi Province.