Yesterday Patently Apple posted a report titled "Tim Cook's meeting with French President Macron was relatively brief and to the Point about future Taxes." We noted in that report that France's President Macron was leading a group of countries -- including Germany, Italy and Spain -- that are seeking a way to plug the European loopholes that allow some companies to minimize taxes by funneling profits to jurisdictions such as Ireland or the Netherlands. Today, it looks like South Korea now wants in the tax grab as well.

In a new Korea Times report titled "Cisco, Apple may shudder at regulatory change," we learn that "Cisco Korea may have to share its key financial information starting next year as the government aggressively pushes to tackle the lack of transparency and tax-dodging practices by foreign enterprises, according to industry sources, Tuesday.

"Though there still is much to be seen about the application of the revision, it can provide authorities the legal grounds to track important financial actions of limited liability companies (LLCs). It would prompt foreign firms such as Cisco Korea to monitor possible malicious offshore tax evasion and practices of base erosion and profit shifting," an industry source said.

Under the current law, LLCs have been considered private companies and thus have been exempt from external audits. A commercial law revision in 2011 even lifted regulations on their number of investors and share assignments, giving them extra freedom.

To tap into such unchecked freedom, Cisco Korea changed itself to an LLC in 2013 like many other Korean subsidiaries of foreign enterprises such as Apple. Apple Korea had become an LLC earlier in 2009. Cisco Korea, which is 100 percent owned by its U.S. headquarters, was founded in 1994.

'Many local subsidiaries of global enterprises have received external audits from accounting firms, following directions from headquarters,' the source said. 'The point will be that if the law can tackle profit shifting practices of Korean subsidiaries of global firms and force them to release actual sales and profit information they generate here, it will be difficult to force their global headquarters to bend their rules to take advantage of Korea.'"

About Making Comments on our Site: Patently Apple reserves the right to post, dismiss or edit any comments. Those using abusive language or negative behavior will result in being blacklisted on Disqus.