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Google Korea pays 600 bln won in penalty tax: sources

Economy 09:30 July 10, 2020

SEOUL, July 10 (Yonhap) -- The South Korean unit of U.S. tech giant Google Inc. has paid the local tax office 600 billion won (US$501 million) in back corporate taxes, sources said Friday.

Google Korea made the payment in January after the National Tax Service (NTS) slapped the penalty tax on the company for not paying proper taxes for profits generated in the country.

Despite the payment, Google Korea has filed a complaint with the Tax Tribunal, which has yet to make a ruling on the case. The Tax Tribunal is recommended to announce a verdict within three months.

Google Korea is allowed to lodge a lawsuit with a Seoul court against a ruling in favor of the NTS. Google Korea could get the money back should the tribunal rule against the tax office.

The lobby of Google Korea headquarters in Seoul (Yonhap)

At the heart of the issue is whether Google Korea has a "fixed place of business" in South Korea.

Google Korea and other global IT companies claim they are not subject to taxation here because their servers are located overseas.

But the NTS has decided to impose a penalty tax on Google Korea, citing those servers virtually operate in "countries of business" despite their overseas locations.

South Korean tax authorities had been conducting an investigation into Google Korea since late 2018.

Seoul has also been doubling down on tackling the issue of so-called base erosion and profit shifting (BEPS), or tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low-tax or no-tax locations.
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