Samsung Electronics, SK hynix Report Zero Corporate Taxes – Here's Why – BusinessKorea
Samsung Electronics and SK hynix did not pay corporate taxes last year as they both recorded operating losses due to the downturn in the semiconductor industry.
According to Samsung Electronics’ business report released on April 23, the company recorded an operating loss of 11.52 trillion won (US$8.37 billion) last year based on separate financial statements.
Based on consolidated financial statements including subsidiaries, Samsung Electronics reported an operating profit of 6.56 trillion won last year. However, Samsung Electronics’ standalone performance, excluding subsidiaries, showed a deficit.
As a result, Samsung Electronics did not pay the corporate taxes that were due by the end of March this year. It has been reported that Samsung Electronics not paying corporate taxes is the first time in 52 years, since 1972.
According to separate financial statements, SK hynix recorded an operating loss of 4.67 trillion won last year. However, based on consolidated financial statements, the operating losses increased to 7.73 trillion won. Consequently, SK hynix also did not pay corporate taxes in March.
Both Samsung Electronics and SK hynix recorded operating losses last year due to the impact of the global semiconductor industry downturn. To mitigate the downward trend in product prices resulting from worsening industry conditions, SK hynix began reducing production at the end of 2022 while Samsung Electronics initiated the reduction in April of last year.
However, when considering the corporate tax payment schedule, the amount collected by the government from Samsung Electronics and SK hynix this year may not be zero. This is because domestic companies typically make advance payments, also known as interim payments, of corporate taxes for the current year. Usually, they pay half of the corporate tax for the current year as an interim payment in August and settle the remaining half in March of the following year.
With the semiconductor industry showing signs of recovery, it is expected that both Samsung Electronics and SK hynix will achieve profitability on an annual basis this year. Samsung Electronics’ preliminary results for the first quarter amounted to sales of 71 trillion won and operating profit of 6.6 trillion won. SK hynix is scheduled to announce its first-quarter results on April 25, with the industry anticipating sales of around 12 trillion won and operating profit in the range of 2 trillion won.
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