Samsung Electronics and SK Hynix in Global Digital Tax Scope... "Closely Monitoring Impact"

[Asia Economy Reporter Woo Su-yeon] With the final agreement on the introduction of a digital tax requiring global conglomerates to pay taxes not only on profits earned in their home countries but also overseas, the calculation for domestic companies now within the scope is expected to become more complex. Domestic companies meeting the digital tax imposition revenue criteria, such as Samsung Electronics and SK Hynix, are closely monitoring the impact of this new system.

On the 8th (local time), the OECD (Organisation for Economic Co-operation and Development) and the G20 comprehensive implementation framework announced through a virtual plenary meeting that they secured support from 136 out of 140 countries and discussed the final agreement and implementation plan related to the digital tax.

According to this discussion, 'Pillar 1,' which allocates taxing rights so that multinational corporations pay taxes in the countries where revenue is generated, and 'Pillar 2,' which applies a global minimum tax rate, were finalized. According to the agreement, the taxing rights on revenue for large corporations with an annual consolidated revenue of 20 billion euros and an operating profit margin of 10% or more will belong to the market jurisdiction. Additionally, these companies must share a 25% tax on excess profits exceeding the normal profit margin (10%) with each market jurisdiction.

Currently, domestic companies meeting these criteria are limited to Samsung Electronics and SK Hynix. From 2030, the revenue threshold for digital tax imposition will be lowered from the current 20 billion euros to 10 billion euros, potentially expanding the number of domestic companies subject to payment.

For now, Samsung Electronics and SK Hynix are closely observing the developments regarding the introduction of the digital tax. There is an interpretation that since the digital tax means that domestic and foreign countries share taxing rights, only the countries where taxes are paid will change, but the total tax amount for companies will not differ. However, with the introduction of this new form of global system, concerns about double taxation and increased costs related to tax compliance cooperation may additionally rise.

Furthermore, the global minimum tax rate (15%), enacted to prevent tax avoidance through low-tax jurisdictions, may also affect domestic and foreign companies. The agreement stipulates that multinational corporations with consolidated revenues exceeding 750 million euros must apply the 15% global minimum tax rate (Pillar 2).

This means that from 2023, applicable companies must pay at least 15% tax on business activities conducted in all countries. Companies that have expanded overseas subsidiaries due to low tax rates may face additional tax burdens.

An industry official said, "It is concerning that the scope of digital tax application is expanding to most industries and that a significant number of domestic export companies are included in the minimum tax rate application." He added, "The government needs to actively support identifying additional burdens on domestic companies and reflecting them in overseas expansion strategies."

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