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Power bloggers face tax probe

NTS faces legal roadblock to getting portals to offer info about bloggers


The National Tax Service said Thursday it has requested that the country’s major Internet portals provide the personal information of some 1,300 power bloggers on concerns they might be evading taxes.

“Early this week, we have asked five to six blog operators including Naver, Daum and SK Communications to offer information about power bloggers,” said Shin Soo-won, director of the electronic tax resource division at the National Tax Service, in an interview. “Whether a purchase takes place on a personal blog or a large online community, all the electronic transactions are subject to taxation.”

The latest move by the powerful NTS is expected to spark a dispute among the fast-growing group of professional bloggers in Korea as they have largely been excluded from such supervision. But the tax agency faces a major legal roadblock in securing detailed information about power bloggers because portals are reluctant to hand over such sensitive data, citing the Protection of Communications Secrets Act.

Leading portals such as NHN and Daum have refused to offer any data about their bloggers, whose frenetic online activity contributes greatly to overall Web traffic.

“The portals are adamantly opposed to the idea that the identification of power bloggers should be shared with authorities, and it’s true that their argument based on the Protection of Communications Secrets Acts is valid in terms of privacy protection,” said Shin. “But a change is needed to address the power blogger problems because there is no way to identify them.”

Companies intent on capitalizing on the influence of power bloggers are not cooperating, either. In theory, any company which provides a monetary reward to bloggers in return for a favorable product review or group purchases should document the transactions formally so that authorities can impose due taxes on such deals. In reality, many power bloggers accept offers to write product reviews or engage in other promotional activities only if such deals do not leave any record for future taxation, and corporate sponsors tend to succumb to their demand.

Last week, the Fair Trade Commission announced that Korea’s online users, including power bloggers who post product reviews in return for benefit, will be obligated to disclose their contract details from July 14, a move aimed at protecting consumers from unfair online transactions.

Both the country’s top tax agency and the state-run antitrust regulator are rushing to block some of the power bloggers from harming consumers, but whether their move will indeed lead to an effective control is in doubt.

Even if the NTS could get the information about the power bloggers through a revision to the related law, Korean bloggers can simply switch to a foreign blogging platform operator to conceal their identity and still engage in illicit deals without leaving any traces that can be detected by the local authorities.

Korea’s blogosphere remains stagnant, hurt by the rapid growth of social networks such as Twitter and Facebook, but a striking case early this month gripped the nation, touching off discussions about the need to put a control on the power bloggers who abuse their online power.

The case involved a blogger nicknamed “Babyrose,” who arranged sales of ozone sterilizers priced at 360,000 won ($305) per unit. She took 70,000 won per unit from the company as a commission when she brokered the sales to her visitors, and the total amount of fees she earned was estimated to reach 200 million won ($189,000). The massive sales, however, led to a major scandal as a local broadcasting network put out a test result showing the ozone sterilizer in question could harm people’s health, leading to a public fury over power bloggers engaged in commercial postings.

By Yang Sung-jin  (insight@heraldcorp.com)
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