G20 to progress digital tax plans targeting tech giants: Report
A group of 20 global finance leaders have reportedly agreed to plans that would see technology giants such as Facebook and Google pay more taxes.
Reuters is reporting that in a draft communique, G20 members have agreed to implement common rules to close international loopholes that see multinationals able to book profits offshore in locations where the tax rate is low to avoid local taxation requirements.
According to the publication, the new rules that would come into place next year would mean higher tax burdens for large multinational firms.
"We welcome the recent progress on addressing the tax challenges arising from digitisation and endorse the ambitious program that consists of a two-pillar approach," Reuters is quoting the draft communique as saying. "We will redouble our efforts for a consensus-based solution with a final report by 2020."
The New Zealand government last week released a discussion paper on its local taxation laws, specifically hoping to fix the problem of multinational digital companies conducting substantial business in the country despite paying no tax on income or revenues.
The government highlighted two possible ways this could be done: The first is to attempt to get other nations on board to change international income tax rules and the second is to apply a separate tax to certain digital transactions.
The second -- a digital services tax (DST) -- would be an interim measure for taxing the digital economy as the nation's global peers worked on an international standard.
Over the ditch, the Australian government legislated a Diverted Profits Tax (DPT) in March 2017, which was intended to prevent the practice of multinational organisations shifting profits made in Australia offshore to avoid paying tax.
The DPT hits multinationals with global revenue of more than AU$1 billion and Australian revenue of greater than AU$25 million with a 40% tax on all profits.
The tax is expected to see AU$100 million in revenue per year -- from 2018-19 -- stay on Australian soil.
The legislation mirrors laws implemented in the United Kingdom, nicknamed the Google Tax, after the search engine giant was ordered to pay the UK government £130 million in back taxes.
The EU has also been eyeing a union-wide 3% tax on big tech firms, which has been adamantly supported by France. Discussions for the proposed EU-wide tax arose in part to prevent companies like Apple from shifting their profits to countries with lower tax rates.
In December, France said it would start taxing tech giants at a national level in 2019 if the EU could not agree upon a solution to pass the 3% tax.
Still in Europe, Apple is paying back the €13 billion Irish tax fine given by the EU for paying "substantially less tax" than rival companies to Ireland, which is illegal under state aid rules.
Meanwhile in the US, President Donald Trump has also taken many swipes at Amazon over it allegedly paying too little tax in the US and its use of the US Postal Service for deliveries.
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