[‘Countdown’ Global Minimum Tax] ① 64% of Top 50 Major Companies "Unclear Tax Liability and Scale"… Concerns Over Tax Increase

Unable to Determine Tax Liability and Scale
Only 5 Companies "Confident in Payment"
Implemented in 140 Countries Worldwide
Companies Unable to Estimate Scale
Actual Payments Likely Higher
Free Overseas Business Activities Restricted

Although the global minimum tax, which requires the parent company to cover the difference when overseas subsidiaries are subject to a corporate tax rate lower than the minimum rate of 15%, was implemented starting this year, it has been revealed that domestic large corporations are not even aware of whether they are subject to it. More than four months after companies began reviewing the actual tax amounts they must pay and the resulting impacts, each company stated that they have no idea whether they are liable to pay or how to respond if they are. With about two years remaining until the actual payment deadline in June 2026, there are growing concerns that if companies do not prepare thoroughly, the 'global minimum tax' could inadvertently become a corporate tax bomb.

On the 20th, Asia Economy conducted a full survey of the business reports (based on the shareholders' meetings held in March) of the top 50 domestic companies expected to be subject to the global minimum tax. The results showed that more than half, 32 out of 50 companies, stated they are "under review," meaning they are examining whether they are subject to payment and the overall tax amount. This accounts for 64% of the total.

The responses from these 32 companies fell into three main categories. Fourteen companies said, "We are reviewing, but estimation is impossible at this stage," another 14 companies simply said "under review" without further explanation, showing a cautious stance. Only four companies said, "We are reviewing, but currently expect no impact."

On the other hand, five companies (10%) confidently stated that "(Although the tax amount is unknown) we will be required to pay the global minimum tax." These included HD Hyundai, Samsung SDI, S-Oil, and Lotte Holdings. HD Hyundai drew attention by detailing, "The consolidated financial statements for the 2021 and 2022 fiscal years show sales exceeding 750 million euros each year, and among the countries where subsidiaries operate, Hungary, the United Arab Emirates (UAE), and the Marshall Islands have statutory tax rates below 15%. Based on the 2023 financial statements, we conducted a transitional exemption test under Article 80 of the National Tax Adjustment Act, and expect subsidiaries in Argentina and the UAE to be subject to the global minimum tax."

Only 17 companies (34%) stated either that they did not disclose whether they were reviewing or said "there will be no impact" or "this is not a significant matter" for their company.

The global minimum tax is a system that requires multinational corporations with subsidiaries in various countries to pay the difference to the country where the parent company is located if a subsidiary is taxed at a rate lower than the minimum rate of 15%, ensuring the tax rate reaches 15%. It was created through an agreement by the Organisation for Economic Co-operation and Development (OECD) and the Group of Twenty (G20) to prevent deliberate tax avoidance by exploiting countries competing through tax incentives to attract multinational corporations. A total of 140 countries have agreed to this system, also known as 'Pillar 2.'

Judging from the expressions used in the business reports, companies seem to perceive the global minimum tax as an 'unknown tax bomb.' The atmosphere is one of facing this tax without proper preparation. The sections explaining this tax avoided definitive expressions. Even forecasts were merely 'guesses' based on applying previous years' accounting data, and companies were not confident about these estimates. The fact that the global minimum tax was only introduced this year and detailed rules remain unclear also contributes to the difficulty in accurately predicting the tax's impact.

South Korea passed the amendment to the 'International Tax Adjustment Act' for the introduction of the global minimum tax in December 2022, and it was implemented from January 1 this year. The application target is multinational corporations with consolidated sales of 750 million euros (approximately 1 trillion KRW) or more in at least two of the previous four fiscal years. The Ministry of Economy and Finance estimates that about 245 Korean companies will be subject to this tax. However, experts point out that considering the need to comprehensively analyze the corporate tax rates in regions where subsidiaries operate, subsidy payments, and tax payment practices, the remaining two years are not a distant future.

The government, concerned about confusion from the new system, introduced it this year but postponed the implementation of the income inclusion rule (UTPR), which contains the actual calculation details, until next year, and deferred tax filing and payment until June 2026. With this grace period, companies are focusing all their efforts on understanding every aspect of this tax.

The longer the review is delayed, the more corporate anxiety is likely to increase. At a recent seminar on 'Responding to the U.S. Inflation Reduction Act (IRA) and the Global Minimum Tax,' jointly hosted by the Korea Battery Industry Association, Korea Petrochemical Industry Association, and Korea New and Renewable Energy Association, certified public accountant Jung Hyun from law firm Yulchon stated, "Last year, LG Energy Solution (676.8 billion KRW) and SK On (610 billion KRW) received about 1.3 trillion KRW in IRA tax credits. If there is no other income or loss, domestic companies will have to pay an additional tax of about 180 billion KRW, which is 15% of this amount, under the global minimum tax." However, he also noted this is uncertain. Jung emphasized, "This figure is a simple calculation based on disclosed performance and is not accurate. The actual tax payable could be much higher."

A corporate official expressed concern, saying, "When multinational corporations establish overseas subsidiaries, it is often because operating activities are difficult in the parent company's country due to various conditions. The global minimum tax reduces the tax reduction benefits for these companies and hinders free management activities abroad."