South Korean government plans to make it mandatory for foreign multinational companies operating in the country to disclose their income statement, as part of efforts to establish a new tax code for high-earning foreign firms in Korea.

According to industry sources on Thursday, the government plans to enact a law to require some limited liability companies to file their financial statements starting November 2018. Most major overseas companies doing business in Korea are currently not subject to the corporate disclosure regulation because their Korean operations are set up as limited liability companies.

Under the current law, some global tech giants, such as Google, Facebook and Apple that operate their Korean operations as limited liability companies, have been speculated to evade taxes by keeping their revenue information inaccessible.

But with the revision of the related law, some of them will be obliged to report their corporate information including an income statement that would allow the government to set up tax reform for global companies’ Korean offices.

The revision in the act to be released in the first quarter next year will be applied to foreign firms that have more assets and number of employees than a certain threshold.

Global tech giants such as Google and Apple are almost sure to be included in the group subject for the corporate disclosure regulation as the new law is targeted at overseas firms that have a big influence in the local market.

An official from the Financial Services Commission said that it will thoroughly discuss with IT experts before it set the threshold to prevent global companies from intentionally shaving revenue to avoid the new law.

Separately, the government has required multinational firms with annual sales of more than 1 trillion won ($904 million) to report their tax payment status in each country they operate by January next year. The report is expected to help the government to set up reasonable taxation criteria for big foreign companies.

By Cho Si-young and Choi Mira

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]