Google's South Korean subsidiary, Google Korea, reportedly paid 17.2 billion won in corporate taxes last year. Although there are claims that Google Korea should pay corporate taxes up to 36 times higher considering its actual revenue, the controversy over "taxes evasion" continues.
According to the Financial Supervisory Service's electronic disclosure system on the 22nd, Google Korea reported revenue of 386.9 billion won and operating profit of 35.6 billion won last year, paying 17.26 billion won in corporate taxes. Another South Korean subsidiary, Google Cloud Korea, achieved revenue of 177.8 billion won and operating profit of 19.1 billion won, with corporate taxes amounting to 5.66 billion won. In the same period, Google Payment Korea recorded revenue of 68.1 billion won and operating profit of 4.75 billion won, paying 1.03 billion won in corporate taxes. When combined, Google recorded revenue of 632.8 billion won and operating profit of 59.45 billion won in Korea last year, paying 23.96 billion won in corporate taxes.
However, this level of corporate taxes is low compared to Google's market dominance. Google operates not only search engines but also the app market "Google Play Store" and video platform "YouTube." According to mobile indexing platform Mobile Index, last month, the monthly active user count (MAU) for YouTube in Korea was 47.68 million, surpassing the nation's messenger KakaoTalk (45.94 million) and leading search engine Naver (44.57 million). Despite dominating the domestic market, the corporate tax paid by Google last year was only about 4.3% of what Naver and Kakao paid. Naver and Kakao paid corporate taxes of 390.2 billion won and 159 billion won last year, respectively.
The low corporate tax payment by Google is attributed to the low reporting of its earnings. Google attributes its main revenue sources, such as app marketplace fees and YouTube advertising revenue, as well as YouTube Premium membership fees, to the sales of its Asia-Pacific subsidiary based in Singapore. Currently, Google Korea receives advertising space from Google's Asia-Pacific subsidiary, reselling it to domestic advertisers, and remits most of its revenue, excluding expenses and fees, to the Asia-Pacific headquarters. Additionally, in-app payment fees generated from Google Play are also accounted for as belonging to the Asia-Pacific subsidiary, making it difficult to ascertain specific revenue details.
The industry estimates that the revenue Google Korea earns domestically exceeds 12 trillion won. According to a study published by the Korean Association of Financial Management last year, the estimated actual revenue of Google Korea is about 12.135 trillion won, which corresponds to an appropriate corporate tax amount of 622.9 billion won. This figure is 36 times the corporate tax that Google Korea paid last year. Experts believe that Google Korea likely generated a revenue level similar to that of 2023 even last year. The domestic corporate tax rate is a maximum of 24%, higher than Singapore's 17%.
Currently, there is no legal basis for imposing taxes on Google Korea. Previously, the Seoul Regional Tax Service determined that 975 billion won of the advertising revenue of 1.5112 trillion won earned by Google Korea from September 2016 to December 2018 should be subject to taxes, classifying the total revenue earned from advertising sales in Korea as "royalty income" subject to domestic taxation, leading to a 154 billion won corporate tax and local income tax being imposed. However, Google Korea contested this ruling and filed a lawsuit, and in January, the Seoul Administrative Court sided with Google. The appeal is currently underway at the Seoul High Court, and if the original judgment is upheld, it may become difficult to impose taxes on the revenue Google earns domestically in the future.
The controversy over Google's taxes evasion is a problem globally as well. In response, countries around the world have pushed for the introduction of a "digital tax" known as Google tax, and there have been relevant discussions domestically, but formal implementation has not been achieved. The digital tax aims to create a legal basis for taxing global big tech corporations in the country where they earn revenue, regardless of where their servers are located. Given that U.S. President Donald Trump has threatened to impose tariffs on countries that implement a digital tax, the possibility of its introduction has become increasingly uncertain.
Professor Hyung-koo Kang of Hanyang University stated, "To resolve the issue of Google's taxes evasion, it is necessary to change existing laws or adopt a digital tax, which is currently difficult." He added, "As platform capitalism tends to pursue national interests globally, our government also needs to support strengthening domestic platform competitiveness." He further noted, "In the long term, the government needs to refine the legal framework to maintain tax equity between Google and domestic corporations."