Korea expands VAT for global IT companies - Mobile World Live

Korea expands VAT for global IT companies

12 DEC 2018

A new tax law in South Korea will require global IT companies including Google, Facebook and Amazon to pay value-added tax (VAT) on a broader range of digital services offered in the country from July 2019, The Korea Herald reported.

The country’s National Assembly approved a bill requiring non-domestic ICT companies to pay a 10 per cent VAT on online adverts, cloud computing services and some types of online-to-offline businesses, the newspaper said. The amended law only applies to consumer transactions.

Under the previous law, global ICT companies paid VAT on a limited number of direct-to-consumer services, for example sales from Google Play and Apple’s App Store.

Because it doesn’t cover business-to-business sales, the expanded scope of the tax law is seen as “a symbolic gesture” which will generate little additional tax revenue, The Korea Herald reported.

The original bill pushed for the VAT to be paid on B2B revenue generated in the country, covering online ads and cloud computing, which is significantly larger than consumer sales.

However, the move is seen by many as the starting point for a more comprehensive tax system covering digital platform companies, the newspaper said.

Many countries have considered introducing new taxes on tech giants, many of which have been accused of avoiding paying tax on their global operations through various accounting loopholes.



Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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