The planned tax policy will target firms like Google, Apple, Facebook and Amazon. File photo/AFP
G20 countries are planning a new tax policy for digital giants like Google, based on the business a company does in a country, not where it is headquartered, the Nikkei business daily said on Thursday.
The basic policy is likely to be signed by finance ministers from the Group of 20 countries when they meet next month in the Japanese city of Fukuoka ahead of the main G20 meeting in Osaka, the Nikkei said.
The policy, targeting firms like Google, Apple, Facebook and Amazon, would “allocate revenue to countries that provide large user bases for the world's digital corporate giants,” the daily said, citing unnamed sources.
The countries will seek to reach a final agreement in 2020, but how the policy will work remains to be finalised.
One possibility would be to distribute collected tax revenues to countries based on the number of users a given company has in each country.
That could mean that Facebook, which has centralised its profits and tax payments in Ireland to take advantage of low rates, would see its tax payments redistributed to areas where more of its users live.
But details of how the tax will be collected and distributed and which companies will be affected remain to be finalised, with the Organisation for Economic Cooperation and Development (OECD) expected to help iron out the rules.
The issue of how to tax top digital companies has become increasingly fraught, with several European nations going it alone, drawing the ire of the United States.
The Paris-based OECD is trying to forge a new global agreement that would prevent the firms from simply declaring their income in low-tax jurisdictions, depriving other countries of billions in revenue.
In April, French lawmakers passed the first reading of a bill to impose taxes on digital advertising, the sale of personal data and other revenue for any technology company that earns more than 750 million euros ($840 million) worldwide each year.
A bid to agree a law at the European Union level was scuttled by low-tax countries like Ireland, which have wooed big tech firms.
Austria has proposed similar domestic legislation.
Japan called on Group of 20 counterparts to strengthen coordination to address potential risks to the world economy, as simmering trade tensions and China’s slowdown cloud the global growth outlook.
The global economy is likely to pull out of a brief growth slump later this year — with a little help from the world's central banks and from US and Chinese trade negotiators.
Group of 20 finance leaders on Sunday said that trade and geopolitical tensions have “intensified”, raising risks to improving global growth, but they stopped short of calling for a resolution of a deepening US-China trade conflict.
The Group of 20 finance ministers agreed on Saturday to compile common rules to close loopholes used by global tech giants such as Facebook to reduce their corporate taxes, a copy of the bloc›s draft communique obtained by Reuters showed.
Strong incentives for UAE investors to target the Israeli high-tech market are underlined in a first of its kind report published on Sunday following record investment activity and growth in 2020, despite the COVID-19 pandemic.
The Sharjah Airport International Free Zone (SAIF Zone) has signed an investment agreement with TORRECID of Spain, a globalised multinational business group dedicated to providing products, services,
Bahrain-GCC trade reached $5.7 billion in 2020, accounting for 25 per cent of Bahrain’s global bilateral trade for the year ($20.8 billion).