South Korea moving to tax Apple, Amazon, Google & other tech companies
Amidst cries of "reverse discrimination" from South Korean politicians, the government of the country is planning to collect taxes from Apple, Google, Amazon and other global tech giants for the first time.
According to a report by the Korea Times, South Korea's government is planning to "move quickly" to impose taxes on foreign companies, including Apple, Google and Amazon. Current law does not require them to pay corporate taxes there.
The dispute represents a repeat of Apple's recent experience in Ireland, which Apple long treated a tax haven before its government recently began collecting taxes.
Politicians in South Korea have complained of "reverse discrimination," in that South Korean companies both pay taxes and abide by regulations, while foreign firms doing business in the country are not subjected to such restrictions. Samsung, both a supplier and main rival of Apple, is headquartered in South Korea.
Last November, South Korean authorities raided Apple's offices in that country, ahead of the launch of the iPhone X. The raid was part of what was described as an ongoing probe.
Apple opened its first Apple Store in South Korea this past January. in the Gangnam area of Seoul. In April, Apple poached Brandon Soon, a veteran of Microsoft and Samsung, to head up Apple Korea.
According to a report by the Korea Times, South Korea's government is planning to "move quickly" to impose taxes on foreign companies, including Apple, Google and Amazon. Current law does not require them to pay corporate taxes there.
The dispute represents a repeat of Apple's recent experience in Ireland, which Apple long treated a tax haven before its government recently began collecting taxes.
Politicians in South Korea have complained of "reverse discrimination," in that South Korean companies both pay taxes and abide by regulations, while foreign firms doing business in the country are not subjected to such restrictions. Samsung, both a supplier and main rival of Apple, is headquartered in South Korea.
Last November, South Korean authorities raided Apple's offices in that country, ahead of the launch of the iPhone X. The raid was part of what was described as an ongoing probe.
Apple opened its first Apple Store in South Korea this past January. in the Gangnam area of Seoul. In April, Apple poached Brandon Soon, a veteran of Microsoft and Samsung, to head up Apple Korea.
Comments
Can somebody please explain what “reverse discrimination” is? I always thought that discrimination was discrimination, no matter which way it was going.
In this case what the Korean politicians are describing is textbook "reverse discrimination," but because it is being defined in a nationalistic context and one would expect that Korea would favor its own companies there is nothing controversial about it. When the same term is used in other contexts it is often misguided, uninformed, and tainted by other biases. Most claims of reverse discrimination are in-fact simply discrimination. Using the term "reverse discrimination" implies that you believe that discrimination should be applied (as Korean politicians believe in this case) - but it is being applied in the wrong direction.
Korea and others are now making a greater effort to treat companies doing significant business in their countries but without a "permanent establishment" the same as companies established there. As it should be IMHO as otherwise "homegrowns" are at a distinct bottom-line disadvantage.
That is tax avoidance. People and companies, for some reason don't want to pay more taxes.... which is a totally odd and strange thing to do.
These typically tax-free areas exist to attract businesses from around the world... and they’ve worked spectacularly everywhere they’ve been used. Now protectionists and political blackmailers get the idea they can squeeze the companies which have brought massive trade and innovation advantages to their countries.
http://www.fez.go.kr/global/en/why/success.do
My question would be now that Apple has finally opened their first retail store there if that establishes them as having permanent operations for tax purposes, and if the problem then becomes the transfer pricing and other IP licensing requirements (license to display logos/product images, forms, etc) to make it appear the store(s) make little to no profit.
For example, in the UK, the "Clean Neighbourhoods and Environment Act 2005" makes it an offence to activate your own burglar alarm and leave the house if you don't have a nominated "key-holder" to switch it off in your absence!
Some laws written in the 19th century still apply here too; ask someone for change for a parking ticket if you only have notes... criminal offence under the Vagrancy Act of 1824, the punishment; "a month in the house of correction" lol.