National Tax Service begins audit of Google Korea

Google Korea headquarters in Seoul’s Yeoksam neighborhood

Investigation follows allegations of tax evasion by high-earning YouTubers

The National Tax Service (NTS) has reportedly begun a tax audit of Google Korea. Industry observers said the investigation was launched over allegations of tax evasion by high-earning YouTube content producers.

The NTS Seoul Regional Office sent investigators to Google Korea headquarters in Seoul’s Yeoksam neighborhood on Dec. 12 to collect accounting ledgers and computer documents. Tax issues related to high-earning content producers for the Google-owned platform YouTube have been consistently raised in the past.

As of last year, a total of 1,275 YouTube channels created by South Koreans had 100,000 or more subscribers, with earnings reportedly totaling 2.8 million won (US$2,490) a month for 100,000 subscribers. The channel PomPom Toys earned profits of up to 3.16 billion won (US$2.8 million) last year.

“We have notified 513 [YouTube users] about [income tax] reporting,” NTS commissioner Han Seung-hee said in a parliamentary audit last October, adding that he agreed with the tax audit on high-earning YouTubers.

“We are tracking revenue source trends and will ensure there is no evasion on income,” he said.

Minister of Science and ICT You Young-min also said in a parliamentary audit that his ministry was “cooperating with the Ministry of Economy and Finance, the Financial Services Commission, the Fair Trade Commission, and the Korea Communications Commission to discuss the issue of taxing overseas businesses.”

“We also plan to discuss a joint investigation [to determine total sales],” he added.

Appearing as a witness at the time of the audit, Google Korea CEO John Lee refused to answer lawmakers’ request that he disclose the scale of the company’s sales in South Korea and the amount of sales and net profits reported to tax authorities, citing “business secrecy.”

Following the passage of a partial amendment to the Value-Added Tax Act by the National Assembly’s plenary session on Dec. 8, Google will be required to pay value-added taxes as of July 2019 on some of the services it offers in South Korea. At the moment, no clear standards exist for taxation of the Google Store, which accounts for the largest portion of Google Korea’s sales. Google Korea previously stated that Google is paying taxes in South Korea and complying with domestic tax laws and tax treaties.

By Park Tae-woo, staff reporter

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