Some 110 countries have agreed to work towards an international consensus by 2020 on how to tax cross-border digital businesses, the Organisation for Economic Co-operation and Development (OECD) said on Friday (16.03.2018).
Digital giants such as Google, Apple and Amazon have for years been able to exploit current legislation to legally cut their tax bills in some countries, to the frustration of governments.
In a report commissioned by G20 powers, the OECD said countries had agreed to review the pillars of the international tax system, which the digital economy has increasingly rendered obsolete.
The report, which will be presented to G20 finance ministers at a meeting in Buenos Aires on March 19-20, acknowledges that bridges will need to be built with some countries that believe nothing needs to change.
At the heart of the problem are rules about what constitutes a large enough company presence in a country for it to be taxed there and how profits are distributed across borders by multinationals.
In the absence of an international solution, countries such as India, Australia and several European nations have taken it upon themselves to close the loopholes.
Under pressure from France and Germany, the European Commission will propose next week that large companies with significant digital revenues in the European Union could face a 3 percent tax on their turnover, according to a draft of the proposal seen by Reuters.
Source: Reuters
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