Google’s corporate tax payment in South Korea last year amounted to 28.3 billion won ($19.2 million), marking an 18 percent increase from the previous year. Despite this rise, newly disclosed audit reports on Wednesday revealed that this figure remains significantly below academic estimates of Google’s actual earnings within the local Korean market.
Speculation regarding a potential narrowing of this tax-to-revenue gap has intensified since February. This follows the South Korean government’s requirement for Google to process map data on domestic servers, coupled with March reports indicating the company’s discussions to operate a dedicated Korean data center.
However, industry officials suggest that such a facility is unlikely to significantly alter the taxation structure for Google’s earnings in Korea.
According to the recently released audit reports, Google’s three Korean subsidiaries collectively recorded a revenue of 683.1 billion won for 2025, representing a 7.9 percent year-on-year increase. Google Korea, serving as the largest entity, reported 407.6 billion won, with advertising resales contributing to nearly half of this total. Google Cloud Korea posted 205.3 billion won, while Google Payment Korea recorded 70.2 billion won.
These figures, however, only represent a fraction of Google’s broader business operations in Korea. The three Korean entities primarily function as intermediaries, reselling or supporting services where the main revenue is attributed to Google Asia Pacific, based in Singapore. Academic estimates for Google’s actual revenue from the Korean market annually range significantly, from 4 trillion won to 12 trillion won.
In contrast, Naver, a domestic competitor with a considerably smaller share of South Korean internet traffic, paid a corporate tax of 528.1 billion won last year.
The expectation of a structural shift in Google’s tax obligations arises from two key developments earlier this year. In February, an inter-ministry committee granted approval for Google’s long-desired export of high-precision map data, stipulating that raw data must be processed on domestically held servers by a Korean partner company. Subsequently, in March, Korean media reported ongoing discussions between Google and LG Uplus concerning the construction of a new data center under a Design-Build-Operate (DBO) arrangement. Certain Korean media outlets speculated that this facility could be deemed a taxable permanent establishment.
However, industry officials interviewed by The Korea Herald questioned this interpretation. They clarified that under a standard DBO arrangement, the Korean operator typically maintains ownership of the infrastructure, while the foreign client leases capacity. One official commented, “It depends entirely on how the capital structure is set up,” adding, “DBO does not automatically mean the foreign company owns the asset.”
Furthermore, the government’s condition regarding map data processing does not necessitate Google constructing a new facility. The Feb. 27 decision explicitly states that a Korean partner should process data on servers “it holds domestically.” Notably, LG Uplus already operates seven existing data centers.
Google’s established track record further supports this skepticism. When the company launched its cloud computing region in Korea back in 2020, the servers were strategically placed under a separate subsidiary. Consequently, revenue generated from services like YouTube, search advertisements, and Google Play continued to be directed to Singapore.
LG Uplus, for its part, declined to confirm any specific details regarding its reported discussions with Google.
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