Abstract
The OECD/G20 reached a final agreement on the core content of Pillar1 on October 8, 2021. However, no clear analysis results have been reported yet on the impact on Korean companies based on this final agreement. Therefore, the purpose of this study is to analyze the changes in tax burden with target companies among Korean companies based on this final agreement.
The analysis results of this study are as follows. First, Samsung Electronics Co., Ltd. and SK Hynix Co., Ltd. are analyzed as companies to which Pillar1 of the final agreement was applied (more than 20 billion euros and a gross－profit margin of more than 10%) among Korean companies. The global profits of these companies are 47.4 trillion won and 6.4 trillion won, respectively, and corporate tax expenses are about 9.9 trillion won and 1.4 trillion won, respectively. Gross profit margins are 23.70% and 33.89%, respectively, and operating margins are 15.2% and 15.71%, respectively, exceeding 10% in terms of operating margin. Second, the change in additional tax burden for Pillar1 is analyzed through various assumptions, but it is analyzed that there is no additional tax burden for both Samsung Electronics and SK Hynix due to this final agreement.
This study suggests the following policy implications. First, it is necessary to prepare countermeasures at the national level according to a management strategy that lowers the profit rate of companies presumed to be applicable. Second, there are uncertainties in the current agreement, and a more certain strategy is needed in future negotiations. Third, efforts to minimize tax payment cooperation costs are needed. The premise is that global companies’ global sales and profit structure by country must be fully understood through perfect information sharing among tax authorities.
The results of this study are expected to be able to provide policy implications for current policy makers and researchers to suggest how much the digital tax introduction will affect domestic companies.
The analysis results of this study are as follows. First, Samsung Electronics Co., Ltd. and SK Hynix Co., Ltd. are analyzed as companies to which Pillar1 of the final agreement was applied (more than 20 billion euros and a gross－profit margin of more than 10%) among Korean companies. The global profits of these companies are 47.4 trillion won and 6.4 trillion won, respectively, and corporate tax expenses are about 9.9 trillion won and 1.4 trillion won, respectively. Gross profit margins are 23.70% and 33.89%, respectively, and operating margins are 15.2% and 15.71%, respectively, exceeding 10% in terms of operating margin. Second, the change in additional tax burden for Pillar1 is analyzed through various assumptions, but it is analyzed that there is no additional tax burden for both Samsung Electronics and SK Hynix due to this final agreement.
This study suggests the following policy implications. First, it is necessary to prepare countermeasures at the national level according to a management strategy that lowers the profit rate of companies presumed to be applicable. Second, there are uncertainties in the current agreement, and a more certain strategy is needed in future negotiations. Third, efforts to minimize tax payment cooperation costs are needed. The premise is that global companies’ global sales and profit structure by country must be fully understood through perfect information sharing among tax authorities.
The results of this study are expected to be able to provide policy implications for current policy makers and researchers to suggest how much the digital tax introduction will affect domestic companies.
| Translated title of the contribution | Effect and Implications of Domestic Companies in the Adoption of Pillar1 and 2 of the OECD Digital Tax |
|---|---|
| Original language | Korean |
| Pages (from-to) | 9-34 |
| Number of pages | 26 |
| Journal | 세무학연구 |
| Volume | 40 |
| Issue number | 1 |
| State | Published - 2023 |