On Saturday, G20 Officials said that leading world economies must show unity when dealing with aggressive ‘tax optimisation’ by global digital giants. This included tech giants such as Google, Amazon and Facebook.
The Organisation for Economic Cooperation and Development (OECD) has been developing global rules to make digital companies pay tax where they do business, rather than where they register subsidiaries. The OECD said that this could boost tax revenues by a total of $100 billion a year.
No Time to Wait
The German Finance Minister, Olaf Scholz, told a tax seminar that there was “no time to wait for elections”. He also added that “this needs leadership in certain counties”. While saying this, he was looking directly at the US Treasury Secretary Steven Mnuchin, who was sitting next to him at the seminar.
The taxing of digital firms and the effect of the coronavirus on the economy are two major topics being debated on by the G20 financial leaders. These topics will be discussed during their talks in Riyadh this weekend.
Minimum Tax Level
The OECD want to set a minimum effective level to tax big tech companies such as Facebook and Google. They seek agreements by the start of July 2020, with an endorsement by the G20 by the end of the year.
OECD head Angel Gurria told the seminar that a “coordinated answer” was the “only way forward”. Many questions remain about this policy coming into force.
Many European countries, like France, Spain, Austria, Italy and Hungary, already have a plan for digital tax or are working on getting one. This creates a risk of a highly fragmented global system that does not achieve the aims of the OECD. Mnuchin added that “you cannot have in a global economy different national tax systems that conflict with each other”.
The Chief Executive of Facebook, Mark Zuckerberg, responded saying that he would be ready to pay for tax in Europe and would welcome a global OECD solution that would make taxes the same across different economies.