This combined image provided by Netflix shows the streamer’s 2022 lineup.
SEOUL, March 16 (Korea Bizwire) — Netflix Services Korea Ltd. has been sending most of its income from South Korea to its U.S. headquarters under the excuse of ‘commission fees’, a lawmaker claimed Tuesday.
Rep. Kim Yeung-shik of the People Power Party gave a briefing on the analysis of reports submitted to the U.S. Securities and Exchange Commission and auditing reports submitted to South Korean authorities, which showed that Netflix Services Korea earned 415.5 billion won (US$336 million) and sent 320.4 billion won to its U.S. headquarters in 2020.
Sales and commissions increased by a factor of 2.2 and 2.6, respectively, from 2019 (185.9 billion won in sales, 122.1 billion won in commissions).
As such, Netflix Services Korea’s cost of goods sold has increased in proportion to the amount of sales, going from 70.5 percent in 2019 to 81.1 percent in 2020.
In contrast, the U.S. headquarters’ cost of goods sold (COGS) ratio dropped from 61.7 percent to 61.1 percent, widening the gap with its South Korean branch by a whopping 20 percentage points.
“Netflix has been inflating the cost of goods sold to cause a serious leak of national wealth. If Netflix’s Korean branch implemented the same COGS ratio as Netflix’s U.S. headquarters, approximately 83 billion won might have been prevented from being transferred overseas,” Kim said.
Ashley Song (ashley@koreabizwire.com)
