SEOUL, Dec. 12 (Korea Bizwire) — South Korea will now be able to impose value added tax on Google, Amazon, and other foreign IT companies.
The National Assembly passed a bill to amend the Value Added Tax Act on Saturday, which will allow for the imposition of value added tax on profits raised from online ads, cloud-computing services, shared economy services, and O2O services provided by Google, Facebook, Amazon Web Services, and Airbnb, beginning on July 1 next year.
Rep. Park Sun-sook of the Bareunmirae Party, who proposed the bill, emphasized the problems surrounding taxation in the age of the digital economy during the parliamentary audit held last October.
“America’s large IT corporations have been trying to evade taxation based on their global tax minimization strategy, which our government has failed to cope with,” said Park.
“The Ministry of Science and ICT, Ministry of Economy and Finance, Korea Fair Trade Commission, National Tax Service, and Korea Communications Commission should conduct joint investigations into this urgent matter.”
Soon after, a joint governmental task force was formed to deliberate on the issue.
Park, based on the interim research paper she received from Oh Jun-seok, a professor at Sookmyung Women’s University, held public discussions on September 10 that lead to the recently passed bill.
The Strategy and Finance Committee at the National Assembly submitted the bill to the Subcommittee on Taxation on November 12, six days after the proposal.
On November 28, the subcommittee agreed to impose value added tax on B2C transactions and sent the bill for final approval at the plenary session held last Saturday.
Park plans to continue working on the issue of transactions between IT corporations and domestic businesses, for which no consensus was formed this time.
“The occasion will serve as a foundation for further discussion on digital taxation,” said Park. “We have now made our first leap toward the age of digital economy.”
H. M. Kang (email@example.com)