Toefl’s Korea branch faces tax probe
Published: 05 Nov. 2009, 01:33
Korea’s tax agency is examining whether it can impose a corporate tax on income earned by U.S.-based Educational Testing Service for fees it collects for the Test of English as a Foreign Language in Korea.
Koreans pay $170 for each Toefl test. Last year, 125,655 people took the test in Korea, bringing ETS $21.36 million in income.
“Currently, ETS is not required to pay tax on the income from the fees, because it does not have a permanent establishment in Korea,” a National Tax Service official explained. “We are looking at whether we can regard ETS’s Korean branch as a permanent establishment.”
A foreign company is required to pay corporate tax in Korea only on the income it makes through its “permanent establishment” here. A permanent establishment is a subsidiary or branch that does an essential part of the parent company’s business here.
ETS Korea, a 100 percent ETS branch, is in charge of supplying test supervisors for the Toefl in Korea.
The International English Language Testing System, a test managed in part by the British Council, pays corporate tax on the test fee incomes in Korea through a Korean subsidiary.
By Moon So-young [[email protected]]
Koreans pay $170 for each Toefl test. Last year, 125,655 people took the test in Korea, bringing ETS $21.36 million in income.
“Currently, ETS is not required to pay tax on the income from the fees, because it does not have a permanent establishment in Korea,” a National Tax Service official explained. “We are looking at whether we can regard ETS’s Korean branch as a permanent establishment.”
A foreign company is required to pay corporate tax in Korea only on the income it makes through its “permanent establishment” here. A permanent establishment is a subsidiary or branch that does an essential part of the parent company’s business here.
ETS Korea, a 100 percent ETS branch, is in charge of supplying test supervisors for the Toefl in Korea.
The International English Language Testing System, a test managed in part by the British Council, pays corporate tax on the test fee incomes in Korea through a Korean subsidiary.
By Moon So-young [[email protected]]
with the Korea JoongAng Daily
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