In the first half of this year, corporate taxes paid by Samsung Electronics and SK hynix topped 11 trillion won. It was the second largest on record for a half-year. With the semiconductor boom sharply boosting both companies' results and pushing corporate tax payments higher going forward, some expect the annual total could exceed 100 trillion won.
According to semiannual and business reports submitted to the Financial Supervisory Service's electronic disclosure system on the 30th, first-half corporate tax payments by Samsung Electronics and SK hynix were 3.9876 trillion won and 7.2207 trillion won, respectively. Combined, the two paid 11.2083 trillion won.
That was up 7.0177 trillion won (167%) from the combined 4.1906 trillion won in the first half of last year. It was the second largest on record for a half-year after 12.6614 trillion won in the first half of 2019.
Samsung Electronics' corporate tax payments jumped 256% from 1.1187 trillion won in the first half of last year, while SK hynix rose 135% from 3.0719 trillion won. In particular, SK hynix surpassed its previous peak of 4.5264 trillion won in the first half of 2019 to set an all-time high for a half-year corporate tax payment.
The record combined corporate taxes in the first half of 2019 reflected the impact of the 2018 semiconductor boom in the preceding year. Companies with a December settlement of account file final returns and pay the prior year's corporate tax in March each year, and make an interim prepayment for the current year in August, paying corporate taxes twice a year.
Indeed, surging demand for server and mobile semiconductors in 2018 drove Samsung Electronics' annual operating profit to a record 58.9 trillion won. In the same year, SK hynix posted 20.8 trillion won in operating profit, the record high before 2024 when the High Bandwidth Memory (HBM) effect took off in earnest.
Given this lag, corporate tax payments by Samsung Electronics and SK hynix are likely to increase further. For roughly 1,600 affiliates of publicly disclosed business groups (excluding small and midsize enterprises), the August interim prepayment of corporate tax is calculated based on a provisional settlement for the first half. Using this standard, first-half operating profit for Samsung Electronics and SK hynix was 146.7 trillion won and 98.2 trillion won, respectively, up roughly six to 13 times from 11.4 trillion won and 16.7 trillion won in the first half of last year.
On top of that, full-year outlooks have risen sharply. Over the past month, the consensus for this year's operating profit compiled by Yonhap Infomax (the average of securities firms' forecasts) is 385 trillion won for Samsung Electronics and 266 trillion won for SK hynix. Compared with last year's operating profit of 43.5 trillion won and 47.2 trillion won, respectively, that is up as much as ninefold.
Accordingly, not only the August interim prepayment this year but also next March's final filing for this year's results is expected to see a sharp increase in corporate taxes.
Some estimate the two companies' corporate tax payments could exceed 100 trillion won for the year. Assuming a combined individual-basis operating profit—the basis for calculating corporate tax—of 500 trillion to 600 trillion won and simply applying a 20% effective tax rate, corporate taxes could top 100 trillion won.
However, the final corporate tax payments could differ, as this is a simple calculation that does not factor in tax credits for research and development and domestic investment or the method for calculating interim prepayments. Actual payments may vary depending on detailed calculation methods and credit benefits.