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South Korean broadcasters call for OTT Tax

The South Korean authority is planning to impose a tax on over-the-top (OTT) service providers and channelling the taxes collected to the Broadcasting and Communications Development Fund.

The Ministry of Science and ICT & Future Planning has asked the Korea Legislation Research Institute to study the current status of digital taxes in the country — especially in the aspect of OTT services.

As more and more advertisers are moving from traditional broadcasting channels to OTT, broadcasters are proposing that OTT service providers should also contribute to the fund. South Korean terrestrial broadcasting companies are reported to be paying 2%-4% of their sales ads to the development fund.

Last year, Democratic Party of Korea lawmaker Byeon Jae-il tabled an amendment to the Framework Act on Broadcasting Communications Development and the Bill is now pending review from the committee.

However, there are difficulties in imposing a tax on foreign OTT services such as YouTube and Netflix, as they remain outside the jurisdiction of local taxation rules; thus, if the bill is passed the tax will have a negative impact on local OTT services and media players, leaving the global players untouched.

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