South Korea’s business circles have submitted a petition to the Organization for Economic Cooperation and Development expressing concerns over the global move to expand the range and rate of digital services tax.

The Federation of Korean Industries said Wednesday that it has submitted a joint statement on behalf of industries here, addressing OECD Secretary-General Mathias Cormann.

“The move to excessively expand the range of digital services tax and to raise its tax rate would contradict the fundamental purpose of the system and dampen corporate activities,” the FKI said.

The idea of taxing the digital economy has been led by European states, with about half of European OECD member states having either announced, proposed or already implemented taxes on selected gross revenue streams of large digital companies.

As the given tax is largely anticipated to impact US-based tech giants, the US had earlier responded with retaliatory measures, but has recently opened up to the talks.

It even set to drastically expand the impact of the taxing system, suggesting that the range of businesses liable for taxation should be expanded to all sectors, not just digital companies.

The FKI’s claim is that the digital services tax should be limited to large digital players with yearly revenues of $20 billion or more.

“A rash expansion would contradict the fundamental intention of digital services tax, which is to prevent multinational digital businesses’ tax dodging,” the FKI said.

The minimum tax rate should be kept at the OECD-suggested 12.5 percent, with exemptions made for the manufacturing industry, it added.

The federation also called for a grace period in the early stage of digital services tax implementation, as well as the establishment of an exclusive, independent dispute settling body.

By Bae Hyun-jung (tellme@heraldcorp.com)