TechDigits

Tech news
Thursday, Mar 28, 2024

Tech giants face higher tax bills under shake-up

Tech giants face higher tax bills under shake-up

The OECD has proposed more powers for governments to tax big companies. Such a move will have an heavy impact on tax heavens and will push the tech giants to use even less legal tactics to avoid fair taxes.

New tax plans aimed at making global firms pay more tax have been published by an international economic body.

The proposals would give governments more power to tax big technology firms such as Apple, Facebook and Google.

The Organisation for Economic and Development (OECD) proposals would mean big companies paying more tax where they sell products and make profits.

Multinational companies could be liable for tax in places where they have no physical presence.

Companies that do business in more than one country have long been a challenge for tax authorities.


Profit shifting


There is a very obvious incentive to structure their business in a way that minimises their tax bills.

Typically that involves allocating profits to subsidiaries in countries - including so-called tax havens - where corporate tax rates are very low even if they do little business there.

The issue has been highlighted by the growth of big technology companies which can provide services in countries where they have little or no physical presence.

The OECD's proposal includes new rules on where tax should be paid and on the proportion of their profits that should be taxed in each country.

The OECD is an organisation whose members are mainly rich countries, although its work on corporate tax brings in a much wider group, a total of 134 countries and jurisdictions.

The organisation's Secretary General Angel Gurria said:

"We're making real progress to address the tax challenges arising from digitalisation of the economy, and to continue advancing toward a consensus-based solution to overhaul the rules-based international tax system".


Tax moves


A number of countries, including France and Britain, have been making their own plans to introduce digital services taxes.

The British proposal would affect companies providing social media platforms, search engines or online marketplaces.

It is scheduled to come into effect in April 2020 but the government said it would rescind it if "an appropriate international solution is in place".

The French tax is already in force, though Paris plans partial refunds if companies pay more under the current regime than they would have been liable for if there is an international agreement.

There are concerns that such unilateral measures could aggravate international economic tensions at a time when they have already been raised.

US companies would be particularly affected by these measures.

Washington trade officials have argued that the French tax unfairly targets American companies and are investigating it under a procedure that could ultimately lead to retaliation in the shape of tariffs on French goods.

So Mr Gurria clearly wants to get an international agreement done soon. He said: "Failure to reach agreement by 2020 would greatly increase the risk that countries will act unilaterally, with negative consequences on an already fragile global economy."


'Increasing complexity'


The proposed measures have been criticised by campaigners.

Alex Cobham, chief executive of the Tax Justice Network said :"The OECDs proposals bring more complexity for tax abusers to hide behind, fail to meaningfully curb corporate tax abuse and will shrink the tax revenues of lower-income, non-OECD member countries that currently suffer losses most intensely from corporate tax abuse."

The OECD proposals would need to be agreed by governments to come into force. The international organisation has launched a public consultation.


Newsletter

Related Articles

TechDigits
0:00
0:00
Close
FTX's Bankman-Fried headed for jail after judge revokes bail
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Musk announces Twitter name and logo change to X.com
The future of sports
TikTok Takes On Spotify And Apple, Launches Own Music Service
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner
UK Crypto and Stablecoin Regulations Become Law as Royal Assent is Granted
A Delaware city wants to let businesses vote in its elections
Alef Aeronautics Achieves Historic Milestone with Flight Certification for World's First Flying Car
Google Blocked Access to Canadian News in Response to New Legislation
French Politicians Advocate for Pan-European Regulation on Social Media Influencers
Melinda French Gates Advocates for Increased Female Representation in AI to Prevent Bias
Snapchat+ gains 4 million paying subscribers in its first year
Apple Makes History as the First Public Company Valued at $3 Trillion
Elon Musk Implements Twitter Limits to Tackle Data Scraping, but Faces Criticism for Technical Misunderstanding
EU and UK's Slow Electric Vehicle Adoption Raises Questions About the Transition to Green Mobility
Top Companies Express Concerns Over Europe's Proposed AI Law, Citing Competitiveness and Investment Risks
Meta Unveils Insights on AI Usage in Facebook and Instagram, Amid Growing Calls for Transparency
Crypto Scams Against Seniors Soar by 78% in 2022, Experts Urge Vigilance
The End of an Era: National Geographic Dismisses Last of Its Staff Writers
Shield Your Wallet: The Perils of Wireless Credit Card Theft
Harvard Scientist Who Studies Honesty Accused Of Data Fraud, Put On Leave
Putting an End to the Subscription Snare: The Battle Against Unwitting Commitments
The Legal Perils of AI: Lawyer Faces Sanctions for Relying on Fictional Cases Generated by Chatbot
ChatGPT’s "Grandma Exploit": Ingenious Hack Exposes Loophole in AI, Generates Free Software Codes
The Disney Downturn: A Near Billion-Dollar Box Office Blow for the House of Mouse
A Digital Showdown: Canada Challenges Tech Giants with The Online News Act, Meta Strikes Back
Distress in the Depths: Submersible and Passengers Missing in Titanic Wreckage Expedition
Mark Zuckerberg stealing another idea: Twitter
European Union's AI Regulations Risk Self-Sabotage, Cautions smart and brave Venture Capitalist Joe Lonsdale
Nvidia GPUs are so hard to get that rich venture capitalists are buying them for the startups they invest in
Chinese car exports surge
Reddit Blackout: Thousands of Communities Protest "Ludicrous" Pricing Changes
Nvidia Joins Tech Giants as First Chipmaker to Reach $1 Trillion Valuation
AI ‘extinction’ should be same priority as nuclear war – experts
×