A man stands in front of the Google logo at Google France headquarters in Paris, Feb. 9. Reuters-Yonhap

Multinational companies operating here will face a series of fines if they refuse to provide tax-related documents and other data to the government in a bid to evade paying taxes, according to lawmakers and experts, Wednesday.

Amid growing concerns that the National Tax Service (NTS) lacks effective measures to address such refusals, which are often aimed at tax avoidance, a subcommittee of the National Assembly's Strategy and Finance Committee passed a revision to the national tax act to impose repeated fines.

If approved at the Assembly's upcoming regular session, the amendment will take effect six months after its official announcement.

The revision will enable noncompliance fines for businesses that fail to submit accounting records and documents without a valid reason during tax audits.

If a company misses the deadline, it will be fined up to 0.3 percent of its average daily revenue. If this amount cannot be determined, a maximum of 5 million won ($3,469) per day will apply. These penalties may be imposed repeatedly until compliance is met.

The amendment aims to prevent multinational companies from exploiting the existing fine structures. Under the current regulation, tax authorities can impose a one-time fine of up to 50 million won on businesses that provide false statements to tax officials or fail to comply with their obligations.

Since the fine limit is low, there have been criticisms that some multinational companies evade taxes worth tens or even hundreds of billions of won by merely paying a one-off fine of up to 50 million won.

For example, the NTS Seoul Regional Office fined a multinational company 1.8 billion won in 2019 across 92 instances for refusing to submit data. However, a court ruled in 2021 that only a single fine could be imposed per tax audit, reducing the penalty to just 20 million won.

A television screen displays the Netflix logo in London, Feb. 9. EPA-Yonhap

This ruling significantly weakened the enforcement of fines. According to data submitted by the NTS to Rep. Song Eon-seog of the ruling People Power Party, the number of fines imposed on multinational companies for refusing to submit tax-related documents dropped from 116 cases in 2019 to just two in 2023. The total fine amount decreased from 2.1 billion won to 66 million won over the same period.

As a result, corporate tax revenue collected by the Korean government from multinational companies like Google, Apple and Netflix accounted for just 7 percent of its total — only a third of the OECD average of 22 percent.

Major economies have enforced stricter penalties for refusing to submit tax data.

"In countries like the U.S., Japan and the U.K., refusing to submit tax data can result in both fines and prison sentences. Germany enforces both imprisonment and compliance fines, similar to the amendment, to enhance the effectiveness of tax data collection," a bill review report by the National Assembly stated.

Experts explained that these global efforts aim to create a level playing field between domestic and multinational companies.

"While domestic companies tend to be sensitive to regulations imposed by a country, multinational ones generally pay little attention to demands from these agencies," Oh Moon-sung, chairman of the Korea Tax Policy Association, said. "The amendment introduces fines that continue to be imposed until compliance is achieved. It could have a significant deterrent effect."

While the revision is expected to target multinational companies, many of which are based in the U.S. like Google, Netflix and Apple, the American Chamber of Commerce in Korea declined to comment on the issue.