- G20 financial leaders propose stringent tax reforms directed at global tech giants.
- G20 financial leaders propose a minimum effective level of tax levied on such companies.
- G20 leaders propose to make tech giants liable to pay taxes in countries where they operate.
In an announcement on Saturday, G20 officials commented that it is high time that the leading economies from across the globe join hands to address vigorous tax optimization and associated complications that tech giants like Amazon, Google, and Facebook have been utilizing for years.
The Organization for Economic Cooperation and Development (OECD) discussed stringent new policies in the latest meeting that will make global digital companies liable to pay taxes in the countries where they operate and earn business. The new rules will no longer enable such giants to confine their taxes to the countries where these firms register their subsidiaries. According to the OECD, such a shift in regulations can result in as much as a $100 billion boost to national tax revenues on an annual basis.
G20 Finance Ministers Are Unwilling To Wait For U.S Presidential Elections
G20 finance ministers also highlighted on Saturday that the new rules will specifically be targeted at the U.S that currently houses the majority of the tech giants. Considering the need of the hour, they added, it is not acceptable to wait for such regulations to be applicable until after the U.S presidential election scheduled in November.
The G20 financial leaders (top 20 economies) held a meeting in Riyadh over the past weekend to discuss the prospect of aggressive taxation on tech giants and the global impact of the recent outbreak of Coronavirus in China.
The meeting saw the OECD proposing a minimum effective level for taxes levied on such companies. While the agreement is sought by the end of June, G20’s endorsement is likely to come by the end of 2020.
The final statement that announces the decision of global financial leaders regarding the minimum effective taxes and the need for such companies to pay taxes in regions where they operate is likely to be announced on Sunday. Sources, however, confirm that many of the leaders are set to vote in favor of such regulations.
USTR Steve Mnuchin’s Comments On Tax Proposal
Similar efforts were also launched by the G20 officials towards the end of 2019, which were later stalled with the U.S asking for a few last-minute modifications. U.S Treasury Secretary, Steven Mnuchin commented on the OECD’s proposal and reiterated that the leaders are approaching an agreement regarding minimum tax applied on the tech companies. Such a move, he added, is likely to address the issue of where such firms are liable to pay taxes to some extent as well. A few components of the tax proposal, however, may only be under the authority of the U.S Congress to approve, as per Mnuchin.
The United States also proposed the tax reforms to have an additional “safe harbor” regime as well. The proposal, however, was broadly criticized by a range of countries including France.