
The total amount of taxes paid abroad by Korean corporations reached a record high of 7.64 trillion won ($5.6 billion) last year, according to Rep. Cha Gyu-geun of the minor liberal Rebuilding Korea Party, Thursday. This is an increase of approximately 4.4 trillion won compared to 2019.
Citing data from the National Tax Service, the lawmaker noted that the top ten firms by revenue paid 3.05 trillion won in taxes to foreign governments, which accounted for 40 percent 한국을 of the total foreign taxes paid. Their foreign tax payments represented 42.7 percent of the corporate taxes they paid in Korea, indicating that they paid nearly half as much in taxes abroad as they did domestically.
The lawmaker attributed the increase in foreign tax payments to a growing number of Korean companies establishing direct production systems overseas, a trend driven by the expansion of global protectionism and rising trade barriers.
The proportion of foreign taxes paid by the top 10 companies compared to their corporate taxes in Korea has rapidly increased, rising from 14.7 percent in 2021 to 32.6 percent in 2022, and reaching 42.7 percent last year.
This trend has raised concerns that the domestic tax base may weaken, as companies can deduct some of the foreign taxes paid when calculating their corporate taxes in Korea.
Rep. Cha said the top 10 companies received a tax deduction of 2.15 trillion won, accounting for 41.7 percent of the total deductions.
“While domestic companies’ overseas expansion is not inherently problematic, there are concerns that it may weaken the domestic tax base,” Cha said.
“It is essential to consider implementing a baseline tax on foreign tax deductions.”