SEOUL, July 2 (Korea Bizwire) — South Korean chipmakers Samsung Electronics Co. and SK hynix Inc. may have to pay part of their corporate taxes to foreign countries where they earn profits under a new global taxation scheme, Seoul’s finance ministry said Friday.
Around 130 countries on Thursday agreed on a two-pillar deal to impose a global minimum corporate tax of at least 15 percent and to share corporate taxes imposed on the profits of multinational companies, in a bid to prevent them from dodging taxes, according to the Organization for Economic Cooperation and Development (OECD).
Under the deal, multinational firms whose yearly consolidated revenue reaches 20 billion euros (US$23.7 billion) and profit margin hits 10 percent would have to pay part of corporate taxes to the markets where they have business activities and earn profits.
Multinational firms have been under fire for their long-held practices of transferring their profits to countries or territories with low corporate tax rates.
Samsung Electronics, the world’s biggest maker of memory chips, and the country’s No. 2 chipmaker SK hynix could be subject to the new taxation rules.
Last year, Samsung Electronics’ revenue amounted to 236.8 trillion won ($208 billion), up 2.78 percent from a year earlier.
SK hynix posted annual sales of 31.9 trillion won last year, but depending on its profit margin, the company could also be excluded from a list of multinational firms subject to the taxation.
Last year, Samsung Electronics and SK hynix paid 4.8 trillion won and 1.4 trillion won in corporate taxes, respectively.
More negotiations will be needed to finalize the tax reform deal as some countries are opposed to it.
Finance chiefs of the Group of 20 economies will continue to discuss the issue at next week’s meeting in Venice, Italy. The deal is expected to take effect in 2023 if it is approved at the G-20 summit in October.