Samsung and SK Hynix Face Increased Tax Burden... Global Minimum Tax Enforcement Decree Announced

Legislative Notice on the Amendment to the Ministry of Economy and Finance's Enforcement Decree of the Act on International Tax Adjustment on the 9th

On the 9th, the Ministry of Economy and Finance announced that it has publicly notified the amendment to the enforcement decree related to the implementation of the global minimum tax scheduled for next year. It is expected that major global companies such as Samsung and SK Hynix, with sales exceeding 1 trillion won, will face increased tax burdens.

On the same day, the Ministry of Economy and Finance publicly notified the amendment to the "Enforcement Decree of the Act on International Tax Adjustment" to stipulate matters delegated by the related law, the "Act on International Tax Adjustment," following the implementation of the global minimum tax on January 1 next year. This enforcement decree concretizes related terms and definitions following the passage of the "Act on International Tax Adjustment" in the National Assembly last December to implement the global minimum tax system.

The global minimum tax imposes additional taxes by the parent company's resident country and other countries if a multinational company receives an effective tax rate lower than the minimum tax rate (15%) on income generated in a specific country where its subsidiary is located. For example, if a global company is subject to an effective tax rate of 10% in a particular country, it must pay the shortfall tax amount of 5% additionally to the country where the parent company is located. This agreement was made by the Organisation for Economic Co-operation and Development (OECD) and the Group of Twenty (G20) countries to prevent excessive competition in lowering corporate tax rates among countries, as cases of tax avoidance by global companies in tax havens have increased.

Multinational corporations with consolidated sales of approximately 1 trillion won or more are subject to this tax. It is expected that information and communication technology (ICT) companies such as Google and Apple, which generate sales in multiple countries, will mainly be affected. The Ministry of Economy and Finance explained that in Korea, Samsung and SK Hynix are likely to be subject to this tax. These companies will face increased tax burdens as they will find it difficult to avoid a minimum tax burden of 15%, regardless of the country where their subsidiaries are located.

However, the actual timing for companies to pay the tax is from 2026. This is because the enforcement decree stipulates the filing and payment period to be 18 months later. The tax amount for the 2024 fiscal year will be reflected in the filing and payment period in June 2026. The Ministry of Economy and Finance stated, "Through this amendment to the enforcement decree, companies can now conduct detailed impact analyses related to the introduction of the global minimum tax system, including whether the system applies and the calculation of additional tax burdens."