'Tentative Agreement on Digital Tax Adoption by 130 Countries... Impact on Samsung Electronics'

OECD Announces Comprehensive Implementation Framework (IF) Statement
Korean Companies Including Samsung Electronics Affected 1-2 Cases
Government: "Significance of Securing Additional Tax Jurisdiction for Google, Apple, etc."

[Sejong=Asia Economy Reporter Son Sun-hee] The international community has taken a step closer to sharing taxing rights over global corporations and introducing a minimum tax to prevent tax avoidance. However, due to opposition from some countries, including Barbados, which is considered a representative tax haven, a full agreement was not reached. Discussions will continue with the goal of finalizing an agreement by the upcoming G20 summit in October.

On the 1st (local time), the Organisation for Economic Co-operation and Development (OECD) announced in a statement that 130 countries supported the 'digital tax agreement' within the Inclusive Framework (IF), which includes 139 participating countries. However, nine countries, including Ireland, Hungary, Nigeria, and Barbados, where corporate tax rates are below 15%, opposed the agreement, resulting in a failure to reach a full consensus. Consequently, the plan to endorse the full agreement at the G20 Finance Ministers' meeting scheduled next week in Venice, Italy, has encountered some setbacks. Nevertheless, since the majority of countries have already expressed support, further discussions will continue with the aim of reaching an agreement. The IF has decided to hold another plenary session before October to persuade the non-agreeing countries.

The provisional agreement supported by 130 countries allocates taxing rights on a portion of excess profits of multinational corporations to the market jurisdictions where sales occur (Pillar 1). This applies to global multinational corporations meeting the criteria of consolidated revenue of 20 billion euros (27 trillion KRW) and a profit margin of 10% or more. In South Korea’s case, Samsung Electronics, which already generates over 80% of its total sales overseas, is expected to be included, and SK Hynix is also likely to be subject to this depending on its sales and profit scale.

The introduction of a global minimum tax of 15% (Pillar 2) is expected to impact multinational corporations that have engaged in tax avoidance through tax havens. For South Korea, where the highest corporate tax rate is around 25%, additional tax revenue is anticipated.

Jung Jeong-hoon, Director of Income and Corporate Tax Policy at the Ministry of Economy and Finance, described the provisional agreement as "the most proactive attempt ever to overcome tax avoidance," adding, "Its greatest significance lies in enabling South Korea to secure additional taxing rights over companies such as Google and Apple."

This content was produced with the assistance of AI translation services.