South Korean chipmakers Samsung Electronics and SK Hynix may have to pay part of their corporate taxes to foreign countries where they earn profits under a new landmark global taxation scheme.
A group of 360 countries agreed on a two-pillar deal on Friday to impose a global minimum corporate tax of 15 percent and to share corporate taxes imposed on the profits of multinational companies, in a bid to prevent them from dodging taxes, according to the Organization for Economic Cooperation and Development (OECD).
Under the deal, multinational firms with global sales above 20 billion euros ($23.1 billion) and profitability of 10 percent will be subject to the new rules.
They are expected to pay 25 percent of profits in excess of a profit margin of 10 percent to markets where they have business activities and earn profits.
According to Yonhap news agency, multinational firms have been under fire for their long-held practices of transferring their profits to countries or territories with low corporate tax rates.
Samsung Electronics, the world’s biggest maker of memory chips, is expected to become South Korea’s first company to be subject to the new rules.
Last year, Samsung Electronics’ revenue amounted to 236.8 trillion won, up 2.78 percent from a year earlier.
South Korea’s No 2 chipmaker, SK Hynix, could be covered by the new tax deal when its annual sales are taken into account. But depending on its profit margin, it could also be excluded from the list of multinational firms to be taxed.
Last year, Samsung Electronics and SK hynix paid 4.8 trillion won and 1.4 trillion won in corporate taxes, respectively.
South Korea’s Finance Ministry said the new global tax scheme is expected to have a limited impact on the competitiveness of Korean firms.