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Photo = Yonhap news |
[Alpha Biz= Kim Young Taek] Google’s local subsidiaries in South Korea paid a combined ₩23.96 billion (approx. $17.4 million USD) in corporate taxes last year, reigniting criticism over global Big Tech firms allegedly avoiding fair taxation.
According to audit reports disclosed Wednesday via the Financial Supervisory Service’s electronic disclosure system, Google Korea posted ₩386.9 billion in revenue and ₩35.6 billion in operating profit in 2023, paying ₩17.26 billion in corporate tax.
Google Cloud Korea reported ₩177.8 billion in revenue and ₩19.1 billion in operating profit, with ₩5.66 billion paid in corporate taxes. Google Payment Korea earned ₩68.1 billion in revenue and ₩4.75 billion in operating profit, contributing ₩1.03 billion in taxes.
In total, Google's three Korean subsidiaries generated ₩632.8 billion in revenue and ₩59.45 billion in operating profit last year, resulting in a total tax payment of ₩23.96 billion.
However, critics argue that Google continues to shift a significant portion of its Korean revenue to its Asia-Pacific headquarters in Singapore, thus minimizing its taxable income in Korea. Google Korea reportedly purchases ad inventory from the APAC HQ and resells it to local advertisers, remitting the majority of earnings—excluding fees and expenses—back to Singapore.
Additionally, fees from in-app purchases made through the Google Play Store are also processed by the APAC HQ, making it difficult to fully track local revenues.
A 2023 study by the Korea Association for Public Finance estimated Google Korea's actual revenue at approximately ₩12.135 trillion, with expected tax liability around ₩622.9 billion—almost 40 times the ₩15.5 billion the company actually paid in corporate tax at the time.
Experts believe Google Korea’s 2024 revenue is likely on par with last year, further fueling concerns about ongoing tax base erosion and profit shifting.
Other U.S.-based tech giants such as Meta and Netflix face similar scrutiny. Netflix’s Korean subsidiary, Netflix Services Korea, has significantly reduced its tax burden by distributing retained earnings as interim dividends to its headquarters—₩28 billion in 2023 and ₩9.5 billion in 2024. As a result, it paid only ₩3.9 billion in taxes last year.
In contrast, local tech firms like Naver and Kakao pay far higher corporate taxes despite generating less revenue than Big Tech counterparts. Naver paid ₩390.2 billion in taxes in 2023, with total revenue of ₩10.7377 trillion and operating profit of ₩1.9793 trillion. Kakao paid ₩159 billion in taxes on ₩7.8738 trillion in revenue and ₩491.5 billion in operating profit.
The growing disparity in tax burdens has caught the attention of lawmakers. Rep. Kim Woo-young of the Democratic Party, a member of the National Assembly's Science, ICT, Broadcasting and Communications Committee, stated, "Google’s corporate tax contribution is disproportionately low compared to domestic firms like Naver and Kakao."
He further noted, “Billions of won in potential tax revenue is improperly being transferred overseas every year.”
Alphabiz 김영택 기자(sitory0103@alphabiz.co.kr)
