National Tax Service Launches New International Tax Response Team... 'Preventing Tax Avoidance by Multinational Corporations'

The National Tax Service (NTS) announced on the 4th that it has established a 'New International Tax Response Team' to prevent multinational corporations from evading their legitimate tax obligations and to alleviate the compliance burden on domestic companies arising from the introduction of digital taxes.

This move follows discussions initiated by over 140 countries worldwide, centered around the Organisation for Economic Co-operation and Development (OECD) and the Group of Twenty (G20), regarding the introduction of digital taxes. The discussions include ▲ 'Pillar 1 Amount A,' which reallocates taxing rights on multinational corporations' income to the market jurisdiction where sales occur, even without a fixed establishment ▲ and 'Pillar 2 Global Minimum Tax,' which grants taxing rights to other countries when income is taxed at an effective tax rate lower than the minimum rate (15%) in a specific country.

The Global Minimum Tax will be implemented this year in major countries including Korea, the United Kingdom, France, and Japan. It applies to multinational corporations with consolidated financial statement revenues of 750 million euros (approximately 1 trillion KRW) or more in at least two of the previous four fiscal years, starting from fiscal years beginning on or after January 1 of this year. The first filing deadline is the end of June 2026.

An NTS official explained, "Due to the digitalization of the economy, the effectiveness of the existing international tax system, which determines taxing rights based on fixed establishments, has diminished. As multinational corporations increasingly avoid establishing physical offices and shift income to low-tax jurisdictions to evade taxes, the need for changes to the existing international tax system has been consistently raised."

The establishment of the New International Tax Response Team by the NTS is a measure to ensure that the new system is implemented as intended and to support domestic companies in complying with the regulations without difficulty. The team is composed of nine members, led by a Grade 4 officer. It will handle tasks such as planning and implementing policies related to digital taxes including the Global Minimum Tax, establishing IT system infrastructure, and participating in international discussions.

Kim Chang-ki, Commissioner of the National Tax Service, stated, "The Global Minimum Tax, which is being discussed and introduced simultaneously by more than 140 countries, is expected to prevent tax competition among countries and create a foundation for a fair competitive environment. The NTS will actively strive to ensure the smooth implementation of digital taxes such as the Global Minimum Tax so that companies do not face difficulties in filing and payment."

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