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2-4% YouTube tax being explored

Aug 16,2019
The government is considering imposing a so-called YouTube tax in response to calls for extending the current tax on broadcasting companies to streaming and video sharing service providers.

The Ministry of Science and ICT recently requested the Korea Legislation Research Institute to explore the feasibility of the measure, according to multiple local media outlets.

The tax refers to the Broadcasting Communications Development Fund, which takes 2 to 4 percent of advertisement revenue from broadcasters to “support the development of broadcasting communications.”

As digital streaming and video-sharing platforms gain traction, some countries are moving to demand more taxes from multinational tech companies.

A government source quoted by Yonhap said that the initiative is in line with the government’s push to impose taxes on Google and Facebook.

“The move goes hand-in-hand with the discussions to devise a new tax rule for big foreign IT companies,” the source said.

The European Union is currently discussing the adoption of a digital services tax, dubbed the Google tax, where multinational IT companies will have to pay 3 percent of its total revenue. Separate from the EU’s efforts, the United Kingdom and France are working on similar taxes.

Countries have alleged that global IT companies like Google shift profits or royalties to jurisdictions that have low or zero tax rates, denying revenue to economies where they operate.

The taxation of multinational video content providers like YouTube was first introduced in France in 2017, though the levy applied to all foreign video streaming and sharing providers.

The European Commission approved the expansion of a tax previously limited to subscription-based video-on-demand, pay-per-view services and video-sharing services by mandating a 2 percent tax on all companies that derive revenue from streaming videos and have a headquarter in France.

The tax was later extended to foreign streaming services, including Netflix and video-sharing websites such as YouTube, distributing content in France but not headquartered there.

Google, which owns YouTube, expressed concern about the moves in a recent blog post penned by Karan Bhatia, Google vice president for government affairs and public policy.

Google is concerned that without a “comprehensive and multilateral agreement,” foreign firms may face “discriminatory unilateral taxes.”

“Indeed, we already see such problems in some of the specific proposals that have been put forward,” Google said. “That kind of race to the bottom would create new barriers to trade, slow cross-border investment and hamper economic growth.”

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]


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