Reuters
Leading world economies must show unity in dealing with aggressive “tax
optimisation” by global digital giants like Google, Amazon and Facebook,
G20 officials have said.
The Organisation for Economic Cooperation and Development (OECD) is
developing global rules to...
make digital companies pay tax where they do
business, rather than where they register subsidiaries.
The OECD says this could boost national tax revenues by a total of Sh10
trillion or $100 billion a year.
The call for unity appeared directed
mainly at America, home to the biggest tech companies, in an attempt to
head off any stalling on the rules until after the US presidential polls
in November.
“There is no time to wait for elections,” German Finance Minister Olaf
Scholz told a tax seminar on the sidelines of a meeting of G20 finance
ministers and central bankers.
“This needs leadership in certain countries,” Scholz said, looking
directly at US Treasury Secretary Steven Mnuchin, sitting next to him at
the seminar. The taxing of digital firms and the effect of the
coronavirus outbreak on the global economy are among the hot topics
being debated by G20 financial leaders, from the world’s 20 largest
economies, during their talks in Riyadh this weekend.
Financial leaders
OECD wants to set a minimum effective level at which such firms would be
taxed and seeks agreement by the start of July, with an endorsement by
the G20 by the end of the year. “A coordinated answer is not the better
way forward, but, given the alternatives, the only way forward,” said
OECD head Angel Gurria.
A draft G20 communique showed financial leaders will endorse the OECD
approach to the issue in their final statement on Sunday, backing the
need pay tax where business is conducted and the need for a minimum
rate.
They will also “reaffirm commitment to reach a consensus based solution
by end of 2020”. The OECD efforts were stalled late last year by
last-minute changes demanded by Washington, which many G20 officials
view as reluctant to deal with a potentially politically tricky matter
before the presidential poll. Mnuchin said OECD countries were close to
an agreement on the minimum tax level, which he said would also go a
long way to resolving the issue of where tax is paid, although he warned
that some aspects of the tax proposal could require approval by the US
Congress.
“I think we all want to get this done by the end of the year, and that’s
the objective,” Mnuchin said. Mnuchin sought to reassure G20 delegates
that a US proposal to add a “safe harbour” regime to the tax reform
effort - which has drawn criticism from France and other countries -
would not let firms simply opt out of paying taxes.
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