France-based global policy forum Organisation for Economic Cooperation and Development (OECD) has published a proposal for countries to tax highly profitable global tech giants companies such as Google, Facebook, and Amazon, which mirrors the one India had floated in February this year. According to the proposal, a company would be taxed by a country if its sales exceeded a certain threshold in the market, with the specific amount yet to be finalised.
The proposal, which applies to multinationals in all sectors, would re-allocate some tax revenue to countries where big companies such as Google, Facebook, Amazon and Apple "have significant consumer-facing activities and generate their profits", the OECD said.
The UK proposal focuses mainly on digital groups, and says any country where a firm has users could impose tax. Many countries, particularly those in Europe, have moved to curb that practice by approving new taxes on large multinational companies that sell to their citizens but pay little or no tax to their countries.
Now open for public consultations, the proposal notes re-allocation of some profits and corresponding taxing rights to countries and jurisdictions where MNEs have their markets.
Historically, the nexus for where a company is taxed has been the physical location of companies, which allowed tech companies to pay less taxes by basing their offices in jurisdictions with lower tax rates. Wednesday's release brought an 18-page framework plan that officials hope will form the basis of an worldwide agreement on digital taxation as early as next year. The companies affected by the new rules would be those with revenue over 750 million euros ($821 million).
"Failure to reach [an] agreement by 2020 would greatly increase the risk that countries will act unilaterally, with negative consequences on an already fragile global economy", OECD Secretary-General Angel Gurría said in a statement. The common criticism is that companies will have to change their entire holding structures to comply with the new tax regime.
Marcus Morris Hilariously Responds To Kevin Durant’s Claim Knicks Aren’t Cool
Knicks coach David Fizdale was pleased with Barrett's performance and hinted that team could even get better as the season progresses.
Want to live longer? New study says dogs can help
But the Swedish study suggests that the companionship of a dog also contributes to a person's health, said Dr. Dog ownership may be linked with a reduced risk of premature death and better cardiovascular outcomes.
Giuliani associates charged with illegally funneling cash to pro-Trump group
In particular, the two suspects allegedly conspired to "funnel foreign money to candidates for federal and state office". Two other men, David Correia and Andrey Kukushkin, also face charges.
"In a digital age, the allocation of taxing rights can no longer be exclusively circumscribed by reference to physical presence".
The proposals issued on Wednesday run in parallel to a second track of reform also steered by the OECD that aims to come up with an internationally agreed minimum corporate tax rate companies can not avoid.
If all goes well an outline agreement to the countries that have signed up will be created in January 2020.
Finance ministers are set to discuss the OECD proposals during a meeting in Washington next week. The measures would apply to companies with revenues of more than US$821 million that operate across global borders and have a "sustained and significant involvement in the economy".
Alex Cobham, chief executive at the Tax Justice Network and a co-author of the study, said: "We're concerned the OECD may be fumbling a golden opportunity to lead the world into a new era of equitable global tax rights".