The financial transparency of global tech giants operating in South Korea is under scrutiny. Google Korea, which manages services like Google Search and YouTube, reported sales of 365.3 billion won (about $272 million) and paid 15.5 billion won in corporate taxes last year. However, with more than 46 million users in the country, experts argue these figures are grossly understated. They estimate the company’s actual revenue in South Korea could be over 30 times higher based on user activity, advertising, and search data.
According to a research report set to be presented Sept. 4 at the Korean Financial Management Association by Kang Hyoung-goo, a professor at Hanyang University, and Jeon Seong-min, a professor at Gachon University, Google Korea’s revenue last year is estimated to be as high as 12.135 trillion won. This figure is based on an analysis of Google’s disclosed economic impact report, market share in South Korea, the percentage of searches with ads, the number of ads per search, and average click-through rates. This estimate is 33 times greater than the 365.3 billion won reported in Google Korea’s financial statements. If the estimated revenue of about 12 trillion won is accurate, Google Korea should have paid up to 518 billion won in corporate taxes. However, the actual tax payment was only 15.5 billion won, or one-thirty-third of the calculated amount. Despite generating more revenue than South Korea’s largest platform company, Naver—which had 9.67 trillion won in revenue and paid 496.3 billion won in taxes—Google Korea’s tax contribution is a mere 3% of Naver’s.
Kang and Jeon also separately estimated the revenue generated by YouTube, the leading platform in South Korea. According to their analysis, YouTube earned more than $853 million from subscription memberships alone in South Korea. The non-search ad revenue, including YouTube ads, was estimated to be as high as $2.86 billion. Despite these significant earnings, Google Korea has not provided any explanation for the discrepancy in reported financials.
“Foreign platforms dominate the South Korean market with their immense capital and technology, yet they fail to fulfill their corresponding responsibilities,” Kang said.
This lack of transparency in the financial dealings of global platform companies is not unique to Google Korea. Facebook Korea also reduces its corporate-tax burden by sending the majority of its local income to its U.S. headquarters under the category of “advertising purchase costs.” The company’s financial statements show 65.1 billion won in revenue and 5.1 billion won in corporate taxes last year, but estimated figures suggest that actual revenue and taxes should be 1.1934 trillion won and 50.9 billion won, respectively. Jeon highlighted that these companies inflate their cost of sales and reduce operating profit margins by claiming payments to overseas headquarters, thereby avoiding their tax obligations.
