Google Estimates 12 Trillion Won Revenue in Korea... Corporate Tax Is a 'Pittance'

Suspicion of Headquarters Relocation of Sales
Assemblywoman Choi Sujin: "Need to Mandate Disclosure of Detailed Sales in Korea"

Google Korea was supposed to pay 622.9 billion KRW in corporate taxes in 2023, but the actual amount paid was only 15.5 billion KRW, less than 2.5% of the expected amount, indicating tax avoidance of over 600 billion KRW.

On the 24th, Representative Choi Su-jin announced these findings based on data released this year by the Korea Financial Management Association (estimating revenue and corporate tax of foreign big tech companies' Korean subsidiaries), as well as information from the U.S. Securities and Exchange Commission (SEC) and DART (Electronic Disclosure System). She conducted an independent analysis of the corporate taxes of Naver and Google Korea.

According to the data recently published by the Korea Financial Management Association, Representative Choi's office explained that Google Korea's estimated revenue for 2023 is approximately 12.135 trillion KRW, and applying the same tax ratio as Naver, Google Korea's corporate tax is estimated to be about 622.9 billion KRW.

[Image source=Reuters Yonhap News]

This amount is about 40 times the 15.5 billion KRW in corporate taxes actually paid by Google Korea, suggesting that the company is paying an excessively low level of corporate tax relative to the profits earned domestically.

Naver, a major domestic platform company, had an annual revenue of 9.6706 trillion KRW and an operating profit of 1.4888 trillion KRW in 2023, with corporate taxes amounting to 496.4 billion KRW, resulting in a corporate tax-to-revenue ratio of approximately 5.1333%.

Google Korea earns substantial profits through domestic advertising, YouTube subscription services, and app market in-app payment commissions, but Representative Choi explained that there is no choice but to raise suspicions that a significant portion of the revenue is being shifted overseas to minimize domestic corporate tax payments.

Google Korea's revenue was found to be significantly lower compared to major domestic platform companies.

In 2021, Naver's revenue was 6.8176 trillion KRW, while Google Korea's was 292.4 billion KRW; in 2022, Naver's revenue was 8.2201 trillion KRW, Google Korea's 344.9 billion KRW; and in 2023, Naver's revenue was 9.6706 trillion KRW, Google Korea's 365.3 billion KRW. Over the past three years, Google Korea's revenue has been only about 4% of Naver's annually. Representative Choi's office stated that Google’s nicknames such as "global big tech" and "IT giant" seem ironic in this context.

Representative Choi pointed out that suspicions are growing that Google Korea is shifting profits earned domestically overseas to avoid taxes, and if this is left unchecked, it will act as a major factor hindering fair competition with domestic companies and will inevitably have a negative impact on the domestic ICT ecosystem in the long term.

Representative Choi warned, “While Google headquarters discloses detailed revenue by service, Google Korea does not disclose detailed revenue items, seriously undermining transparency regarding domestic business performance.”

She emphasized, “To strengthen transparency in the domestic operations of global big tech companies and prevent their tax avoidance behaviors, it is necessary to mandate clear disclosure of domestic revenue details by service, and to promptly establish institutional measures that can resolve opacity in cost calculation and tax reporting processes.”