On Point: Expert's perspective on looming global corporate tax system
Updated: 2021-10-20 04:59:36 KST
Now it's time for On Point, where we speak to experts to dig deeper into the biggest news stories in the spotlight right now.
Finance ministers from the G20 recently gave their seal of approval to a global tax reform plan that could shake up the international business world.
The deal, agreed to at a meeting in Washington earlier this month, is highly likely to be given the green light when the G20's heads of state gather in the coming weeks.
First raised at the OECD-level in the summer, the crux of the plan is a minimum 15 percent tax rate on multinational enterprises, taking effect from 2023.
The ministers said the new system will establish a more stable and fairer international tax system by allowing the home country of the parent company to collect the difference between the rate paid by the subsidiary in the low-tax jurisdiction and the 15 percent rate.
For more on this deal and its possible ripple effects, we connect to Professor Oh Jun-seok from Sookmyung Women's University's School of Business.
Firstly, how will this deal affect South Korea's ability to attract new investment from international firms and what about the foreign firms that already have a base here?
Which of South Korea's sectors are likely to be most affected and do you foresee some of sectors banding together to attempt some form of exemption… if that's even possible…
In spirit, this deal is all but done at the ministerial and leadership levels, but what challenges remain actually enforcing this? One would hope the respective legislatures of the G20 countries would also have to give this deal their blessing for it to take effect?
Finally, if this international tax reform plan does take effect - with the playing field leveled - where do you see South Korea adding value beyond factors like the country's technological prowess and its high capacity for innovation?
Thank you for that and hopefully we can chat about this important topic some more after the G20 leaders' summit. That was Professor Oh Joon-seok from Sookmyung Women's University's School of Business.