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Korean businesses are concerned about the “digital tax” in the OECD

Samsung Electronics

The Korean business community has expressed concern about the new taxes levied on technology companies, including Samsung Electronics and SK Company.

The Federation of Korean Industries, which represents the interests of Korean businesses, stated: “We expressed concern about the side effects of the agreement on digital taxes by the Organization for Economic Cooperation and Development. and Economic Development (OECD). It seems almost all industries are subject to taxes, which can hinder the normal operation of businesses that do not evade taxes.

The Korea Business Organization said digital tax discussions took place initially with the aim of preventing tax evasion by digital service companies.

According to South Korea’s Economy Ministry, the OECD has announced an agreement on the digital tax, which will come into force in 2023 and impact businesses globally with combined annual revenue of 27 trillion won (23.79 billion won). billion USD) and has an operating margin of over 10%.

The purpose of digital taxes is to ensure that companies operating in multiple countries pay taxes in all countries where the company provides services and earns profits, not just taxes. in water.

About 100 Korean businesses are expected to be subject to this new tax.

Under the agreement, companies will have to pay a tax of 20-30% of profits earned in countries when profits exceed the 10% threshold.

In addition, multinational companies with consolidated sales of more than 1.1 trillion won also have to pay a 15% global corporate tax.

This is a measure taken to combat the phenomenon of multinational companies dodging taxes by establishing subsidiaries in countries with lower corporate taxes.

Accordingly, if a business pays a corporate tax of 10% in the country where it has a subsidiary, it will have to pay the remaining 5% in the country.

The Federation of Korean Industries expressed hope that the OECD would come up with a more reasonable measure by listening to the opinions of the private sector.

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