S. Korea set to implement global minimum corporate tax scheme

Seoul's finance ministry

South Korea is set to implement a minimum 15 percent corporate tax scheme for multinational firms next year, in line with a global deal to reduce tax competition between countries and prevent large multilateral businesses from dodging taxes, according to Seoul's finance ministry Sunday.

The planned implementation came as South Korea enacted the new rules through the passage by the National Assembly, which call for the minimum corporate tax rate for multinational corporations with more than 750 million euros ($803 million) in annual revenues.

It is to align with the Organization for Economic Cooperation and Development's Base Erosion and Profit Shifting 2.0 Pillar Two, which was approved by 143 countries.

Some 200 multinational companies operating in South Korea are expected to be affected by the global agreement.

In 2021, the international community agreed on a landmark deal on the two-pillar solution to the tax challenges arising from the digitalization and the globalization of the economy.

Under another rule, dubbed Pillar 1, for companies with global revenues of more than 20 billion euros and profitability of above 10 percent, 25 percent of profits above 10 percent would be taxed according to a new formula based on where a company's customers are located.