RIAD: Major global economies must show unity when dealing with aggressive “fiscal optimization” by global digital giants such as Google, Amazon and Facebook, G20 officials said Saturday.
The Organization for Economic Cooperation and Development (OECD) is developing global rules to make digital companies pay taxes where they do business, rather than where they register subsidiaries. The OECD says that this could increase national tax revenues by a total of $ 100 billion a year.
The call to unity appeared primarily aimed at the United States, home of the largest technology companies, in an attempt to avoid any stalemate in the rules until after the US presidential elections in November.
“There is no time to wait for the elections,” German Finance Minister Olaf Scholz said at a fiscal seminar on the sidelines of a meeting of G20 central finance ministers and 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 taxes of digital companies and the effect of the coronavirus outbreak on the global economy are some of the hot topics for G20 financial leaders, of the 20 largest economies in the world, during their talks in Riyadh this weekend.
The OECD wants to establish a minimum effective level at which these companies would be taxed and seeks an agreement at the beginning of July, with the backing of the G20 at the end of the year.
“A coordinated response is not the best way to go, but, given the alternatives, the only way to go,” OECD director Angel Gurria said at the seminar.
But OECD efforts stalled late last year because of the last-minute changes demanded by Washington, which many G20 officials consider reluctant to deal with a politically complicated issue before the presidential elections.
Mnuchin said the OECD countries were close to an agreement on the minimum level of taxes, which he said would also help solve the problem of where taxes are paid.
“I think we all want to achieve this by the end of the year, and that’s the goal,” Mnuchin said at the seminar.
Several European countries, including France, Spain, Austria, Italy, Great Britain and Hungary, already have a plan for a digital tax or are working on one, creating the risk of a highly fragmented global system.