November 21, 2024

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The logo of Google is seen outside Google Bay View facilities during the Made by Google event in Mountain View, California, US on Aug. 13, 2024. (Reuters-Yonhap)

Google Korea allegedly evaded more than 600 billion won ($450 million) in taxes in 2023, paying only 2.5 percent of its estimated corporate tax obligations, a ruling party lawmaker said on Tuesday.

Rep. Choi Su-jin of the People Power Party, citing reports from the Korean Association of Financial Management and filings from the US Securities and Exchange Commission, revealed that Google Korea paid 15.5 billion won in corporate taxes last year, but considering its estimated revenue, the company should have paid around 622.9 billion won.

According to Google Korea's 2023 audit report filed with the Financial Supervisory Service, the company reported a revenue of 365.3 billion won.

However, a report by Professor Jeon Seong-min of Gachon University estimated the company's actual revenue at around 12.1 trillion won, suggesting that the company’s tax payments should be nearly 40 times higher.

“Despite generating significant income from advertisements, YouTube subscriptions and in-app purchases, Google Korea appears to be minimizing its tax payments by channeling a substantial portion of its revenue overseas,” Choi said.

Choi added that Google Korea’s revenue transparency lags far behind that of major domestic companies. For instance, Naver, a major South Korean internet company, reported revenues of 6.82 trillion won in 2021 and 9.67 trillion won in 2023. In comparison, Google Korea’s reported revenues for the same periods were only 292.4 billion won and 365.3 billion won, respectively -- around 4 percent of Naver’s figures.

The apparent underreporting has raised concerns that Google Korea is exploiting legal loopholes to avoid paying its fair share of taxes, thereby undermining fair competition and potentially harming the local ICT ecosystem.

“While Google’s headquarters provides detailed revenue breakdowns by service, Google Korea fails to disclose the same level of detail, raising serious concerns about the transparency of its domestic operations,” Choi said, urging swift legislative action to hold global tech firms operating in Korea more accountable.

“We need a system that requires clear reporting of local revenues by service and addresses any unclear processes in cost calculation and tax filings to prevent tax evasion."

By Park Li-na (linapark@heraldcorp.com)