Google paid 28.3 billion won ($19.2 million) in corporate tax in South Korea last year, up 18 percent from a year earlier, but far below academic estimates of its actual earnings in the local market, newly disclosed audit reports showed Wednesday.
Speculation that the gap could narrow has grown since February, when the government required Google to process map data on domestic servers, and March reports that the company was in talks to operate a Korean data center.
But industry officials say such a facility is unlikely to alter how Google's Korean earnings are taxed.
According to the audit reports, Google's three Korean subsidiaries posted combined revenue of 683.1 billion won for 2025, up 7.9 percent year-on-year. Google Korea, the largest entity, reported 407.6 billion won, with advertising resales accounting for nearly half. Google Cloud Korea posted 205.3 billion won and Google Payment Korea recorded 70.2 billion won.
Those figures, however, capture only a fraction of Google's Korean business. The three entities function as intermediaries, reselling or supporting services whose primary revenue is attributed to Google Asia Pacific in Singapore. Academic estimates of Google's actual Korean market revenue range from 4 trillion won to 12 trillion won per year.
Naver, which holds a far smaller share of domestic internet traffic, paid 528.1 billion won in corporate tax last year.
The expectation of a structural shift stems from two developments earlier this year. In February, an inter-ministry committee approved Google's long-sought export of high-precision map data, on the condition that raw data be processed on servers held domestically by a Korean partner company. In March, Korean media reported that Google was in discussions with LG Uplus to build a data center under a Design-Build-Operate arrangement. Some Korean outlets suggested the facility could constitute a taxable permanent establishment.
Industry officials who spoke to The Korea Herald questioned that interpretation. Under a standard DBO arrangement, the Korean operator typically retains ownership while the foreign client leases capacity. "It depends entirely on how the capital structure is set up," one official said. "DBO does not automatically mean the foreign company owns the asset."
Separately, the government's map data condition does not require Google to build a new facility. The Feb. 27 decision specifies that a Korean partner process data on servers "it holds domestically." LG Uplus already operates seven data centers.
Google's own track record reinforces the skepticism. When the company launched a cloud computing region in Korea in 2020, the servers were placed under a separate subsidiary. Revenue from YouTube, search ads and Google Play continued to flow to Singapore.
LG Uplus declined to confirm details of its reported discussions with Google.
mjh@heraldcorp.com
