Asian Tech Press (OCT 11) -- South Korean chipmakers Samsung Electronics and SK Hynix may have to pay part of their corporate taxes in the countries where they earn their profits, according to the latest international corporate tax rules agreed by 136 countries and territories worldwide, according to Yonhap News Agency.
According to the Organization for Economic Cooperation and Development (OECD), the latest rules will impose a minimum 15% global corporate tax on profits earned by multinational companies. At the same time, these taxes will be levied separately in different countries to prevent them from evading taxes.
Under the agreement, multinational companies with global sales of more than 20 billion euros (about US$23.1 billion) and profits at the 10% level and above will be subject to the new rules. In those markets where they have business activity and earn profits, these companies are expected to pay 25 percent of their earnings. Multinational companies have come under fire for shifting profits to countries or regions with lower corporate tax rates for a long time.
Samsung Electronics, the world's largest maker of memory chips, is expected to be the first company in South Korea to be subject to the new rules. Last year, Samsung Electronics' revenue reached 236.8 trillion won (about US$198 billion), up 2.78 percent from a year earlier.
SK Hynix, South Korea's second-largest chipmaker, will also be included in the new tax deal based on annual sales. But depending on profit margins, the company could be excluded from the list of multinationals to be taxed.
Last year, Samsung Electronics and SK Hynix paid 4.8 trillion won (about US$4 billion) and 1.4 trillion won (about US$1.17 billion) in corporate taxes, respectively.
However, South Korea's Ministry of Finance said the new global tax rules are expected to have a limited impact on the competitiveness of South Korean companies. The agency said the tax deal would help the South Korean government collect more taxes as global tech giants such as Google and Facebook will have to pay more corporate taxes in South Korea when the rules take effect in 2023.
South Korean Finance Minister Hong Nam-ki said earlier that global multinationals are expected to pay more taxes to the South Korean government than local companies pay to foreign countries.
The OECD said the minimum corporate tax rate could add about US$150 billion in annual revenue to countries and that the right to tax more than US$125 billion in profits is expected to be redistributed to markets where large companies make money.
The new tax deal will be sent to a meeting of G-20 finance ministers scheduled for next Wednesday for approval, and G-20 leaders are expected to approve it at their summit in Rome on Oct. 30 and 31.
