Logo of Phnom Penh Post newspaper Phnom Penh Post - South Korean businesses voice concern over ‘digital tax’

South Korean businesses voice concern over ‘digital tax’

Content image - Phnom Penh Post
Samsung Electronics Co Ltd in South Korea. AFP

South Korean businesses voice concern over ‘digital tax’

South Korea’s business community expressed concerns on July 2 about a global move toward additional taxes on technology companies that would affect Korean tech giants such as Samsung Electronics and SK hynix.

The Federation of Korean Industries, an organisation that represents the interests of Korean businesses, said in a statement: “We express concerns about the side effects of an agreement on the digital tax announced by the Organisation for Economic Cooperation and Development [OECD].

“It appears that almost all sectors of industries are subject to the tax, which could strain normal operations of businesses that are not related to acts of tax evasion,” the federation said.

The Korean business group said discussions about digital taxes had initially started with the aim of preventing tax evasion by digital service companies.

According to the Ministry of Economy, the OECD announced an agreement on the digital tax, which would take effect in 2023 and impact global businesses that surpassed 27 trillion won ($23.79 billion) in annual sales with operating margins of over 10 per cent.

The aim of the digital tax, known as Pillar I, is to ensure that companies operating in multiple countries pay taxes in all the countries where they provide services and earn profit, not just in their home countries.

Around 100 businesses are expected to be subject to the new tax.

According to the agreement, companies subject to the tax will have to pay 20 to 30 per cent of the profit they generate in different countries beyond a 10 per cent baseline.

Samsung and SK hynix appear to be subject to the Pillar I digital tax, according to the ministry.

The Pillar II tax, a 15 per cent global corporate tax rule, would additionally apply to multinational companies with consolidated sales of over 1.1 trillion won.

This is a response to the phenomenon of multinationals circumventing taxes by establishing subsidiaries in countries with lower corporate tax rates.

Under Pillar II, if a company paid 10 per cent corporate tax in a country where it operated a subsidiary, it would have to pay the other five per cent in its home country.

“Pillar II also would limit sound competition in tax payment among countries, which could hinder the free operations of businesses,” the Federation of Korean Industries said. “We hope the OECD will come up with a more reasonable measure by listening to opinions from the private economic sector.”



  • Prince Norodom Ranariddh passes away at 77

    Prince Norodom Ranariddh, the second son of the late King Father Norodom Sihanouk and former First Prime Minister of Cambodia, has passed away in France at the age of 77. “Samdech Krom Preah Norodom Ranariddh has passed away this morning in France just after 9am Paris-time,”

  • Rise in planned flights lifts travel hopes

    Six airlines have applied to resume flights in December, while two others have put in for additional flights and routes, according to State Secretariat of Civil Aviation (SSCA) head Mao Havannall on November 29. These account for 43 new weekly domestic and international flights in December, up 16

  • General’s gun smuggling ring busted

    The Military Police sent six military officers to court on November 22 to face prosecution for possession of 105 illegal rifles and arms smuggling, while investigators say they are still hunting down additional accomplices. Sao Sokha, deputy commander of the Royal Cambodian Armed Forces and commander of

  • Is Cambodia’s travel sector in for another cheerless holiday season?

    The travel and tourism sector was heaving back to life as borders started to reopen, promising a festive vibe for the holidays and New Year. But Omicron and other Covid-related issues are threatening to close the year on a bleak note ‘Seems [like] Covid-19 won’

  • Cambodia, Thailand to discuss border reopening

    Cambodian authorities from provinces along the Cambodia-Thailand border will meet with Thai counterparts to discuss reopening border checkpoints to facilitate travel, transfer of products and cross-border trade between the two countries. Banteay Meanchey provincial deputy governor Ly Sary said on November 22 that the provincial administration

  • Hun Sen: Manet to be candidate for prime minister

    Prime Minister Hun Sen has reaffirmed that his oldest son Hun Manet will be his successor as Prime Minister if he is elected. Speaking during the inauguration of a new sewage treatment facility in Preah Sihanouk province on December 2, Hun Sen said Manet will be