Last year, Netflix, which generated nearly 1 trillion won in revenue in Korea from 'Squid Game 2', 'Culinary Class Wars', and others, has been noted to have paid only 5 billion won in corporate tax.
According to the Financial Supervisory Service's electronic disclosure on the 16th, Netflix's Korean corporation, Netflix Services Korea, recorded 899.7 billion won in revenue and 17.4 billion won in operating profit last year.
This figure is an increase of 76.3 billion won (9.27%) compared to the previous year. Operating profit also rose by 44% to 17.4 billion won. Adding the revenue of another Korean corporation, Netflix Entertainment Korea, which amounted to 49.9 billion won, the total revenue earned by Netflix in the country exceeded 950 billion won.
However, the corporate taxes paid by the two corporations were only 3.9 billion won and 1.3 billion won, totaling just 5 billion won, leading to criticisms that the tax is low compared to the revenue scale.
In fact, Netflix Services Korea reported its cost of revenue at 767.4 billion won, of which 732.4 billion won (95.4%) was specified as payment for 'subscription membership purchases.' This amount was paid to Netflix headquarters as content usage fees, and in 2023, 9.5 billion won in retained earnings was sent to the headquarters as dividends.
In 2021, the National Tax Service determined that this method constituted tax evasion, levying a tax of 78 billion won. Netflix filed a lawsuit against this, losing at the first trial but currently appealing.
Netflix Services Korea indicated through its audit report that "Our operating profit is calculated based on the normal operating profit according to Netflix Group's transfer pricing policy."
Additionally, regarding this matter, Netflix explained to OSEN, "Corporate taxes are assessed based on pre-tax profit after deducting costs related to revenue, not total revenue."
They added, "Netflix faithfully pays all due taxes and, in addition, is making direct investments in Korean content and continuously expanding investments, promoting mutual growth with the entertainment industry."
Meanwhile, season 3 of Netflix's 'Squid Game' is set to be released in June. Additionally, season 2 of 'Culinary Class Wars' is also under production.
[Photo] Provided by Netflix
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