OECD unveils taxation overhaul to squeeze more from Big Tech

Luxury brands also on notice Century of rules face reversal Transferred profits targeted. Dal Financial Times.

The OECD said: ‘Current rules dating back to the 1920s are no longer sufficient to ensure a fair allocation of taxing rights in a globalised world’

The OECD has proposed a global shake-up of corporate taxation, overturning a century of rules that had allowed digital groups such as Face-book, Apple, Amazon, Netflix and Google to shift profits around the world to minimise their tax bills.

The proposals, unveiled yesterday after months of behind-the-scenes negotiations, are aimed at extracting more corporate tax from big multinationals whether they are digital or own highly profitable brands, such as luxury goods makers or global car companies.

The winners would be large countries including the US, China, UK, Germany, France, Italy and developing economies. These would see an increase in their rights to levy tax on corporate income earned from sales in their territories, while the companies themselves, tax havens and low tax jurisdictions such as Ireland would lose.

The aim, the OECD said, was to create a “stable” global corporate tax system because “the current rules dating back to the 1920s are no longer sufficient to ensure a fair allocation of taxing rights in an increasingly globalised world”.

The issue has led to tensions between the US, home of the biggest tech companies, and Europe, with both France and the UK pledging to impose unilateral digital sales tax regimes if a multilateral deal cannot be agreed.

The OECD had indications over the summer that its proposals were likely to win support from the leading economies and this, it hopes, will persuade countries not to go down the unilateral route.

Business and governments indicated backing for the OECD proposals, with Amazon calling them “an important step forward”. The French finance ministry said they were “promising”.

The Paris-based international organisation is seeking agreement in principle from the G20 by the end of January.

The main problem it sought to address was that multinationals — whether digital giants or owners of profitable intangible brands — could shift profits to low-tax jurisdictions, leaving little corporate tax revenue for big economies to collect despite most of their activity taking place in these countries.

It has proposed breaking a taboo in international corporate taxation: that countries only had a right to tax activities from companies that had a physical presence on their soil.

Instead, the OECD proposes that countries should have a right to tax a proportion of the global profits of highly profitable multinationals wherever these might have been shifted.

It would enable France, for example, to tax an element of the sales of Google to French advertisers and the US to have greater taxing rights over the profits attributable to the brands of the French luxury brand company LVMH related to the sales in America.

Emerging and developing economies would gain taxing rights over these companies for the first time.

Tratto dal Financial Times del 10 ottobre 2019

Fonte: Sbilanciamoci.info – http://sbilanciamoci.info/oecd-unveils-taxation-overhaul-to-squeeze-more-from-big-tech/

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