Menu
G20 to compile common tax rules for tech giants by 2020

G20 to compile common tax rules for tech giants by 2020

And close loopholes used by global tech giants

Japan's Finance Minister Taro Aso poses with delegations members during the G20 Finance Ministers and Central Bank Governors Meeting in Fukuoka, Japan June 9, 2019.

Japan's Finance Minister Taro Aso poses with delegations members during the G20 Finance Ministers and Central Bank Governors Meeting in Fukuoka, Japan June 9, 2019.

Credit: REUTERS | Kim Kyung-Hoon

The group of 20 finance ministers has agreed to compile common rules to close loopholes used by global tech giants such as Facebook to reduce their corporate taxes, a final communique issued by the bloc showed on Sunday.

Facebook, Google, Amazon and other large technology companies face criticism for reducing their tax bills by booking profits in low-tax countries regardless of the location of the end customer. Such practices are seen by many as unfair.

The new rules would mean higher tax burdens for large multinational companies but would also make it harder for countries such as Ireland to attract foreign direct investment with the promise of ultra-low corporate tax rates.

"At the moment we have two pillars and I feel we need both pillars at the same time for this to work," Japanese Finance Minister Taro Aso, who chaired the G20 meetings, told reporters.

"The proposals are still a little vague, but they are gradually taking shape."

Britain and France have been among the most vocal proponents of proposals to make it more difficult to shift profits to low-tax jurisdictions, with a minimum corporate tax also in the mix.

This has put the two countries at loggerheads with the United States, which has expressed concern that US internet companies are being unfairly targeted in a broad push to update the global corporate tax code.

Big internet companies say they follow tax rules, but they pay little tax in Europe, typically by channelling sales via countries such as Ireland and Luxembourg, which have light-touch tax regimes.

"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," Sunday's G20 communique said.

"We will redouble our efforts for a consensus-based solution with a final report by 2020."

The G20's "two pillars" could deliver a double whammy to some companies.

The first pillar is a plan to divide up the rights to tax a company where its goods or services are sold, even if it does not have a physical presence in that country.

If companies are still able to find a way to book profits in low-tax havens, countries could then apply a global minimum tax rate to be agreed under the second pillar.

"I see a high degree of willingness to work together on this issue that few could have anticipated a year ago," said Pierre Moscovici, the European Union Commissioner for Economic Affairs.

"We truly believe that the tech giants, which are not only the GAFA, must pay their fair share of tax where they create value and profits."

GAFA is an acronym commonly used to refer to Google, Amazon, Facebook and Apple when talking about the influence of large technology companies.

(Reporting by Stanley White; Editing by David Goodman)


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags G20tax avoidance

Featured

Slideshows

Reseller News kicks off awards season in 2019 with Judges' Lunch

Reseller News kicks off awards season in 2019 with Judges' Lunch

The 2019 Reseller News Innovation Awards has kicked off with the Judges Lunch in Auckland with 70 judges in the voting panel. The awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors. Photos by Christine Wong.

Reseller News kicks off awards season in 2019 with Judges' Lunch
Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomed 2018 inductees - Chris Simpson, Kendra Ross and Phill Patton - to the third running of the Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed the changing landscape of the technology industry in New Zealand, while outlining ways to attract a new breed of players to the ecosystem. Photos by Gino Demeer.

Reseller News welcomes industry figures for 2019 Hall of Fame lunch
Upcoming tech talent share insights at inaugural Emerging Leaders Forum 2019

Upcoming tech talent share insights at inaugural Emerging Leaders Forum 2019

The channel came together for the inaugural Reseller News Emerging Leaders Forum in New Zealand, created to provide a program that identifies, educates and showcases the upcoming talent of the ICT industry. Hosted as a half day event, attendees heard from industry champions as keynoters and panelists talked about future opportunities and leadership paths and joined mentoring sessions with members of the ICT industry Hall of Fame. The forum concluded with 30 Under 30 Tech Awards across areas of Sales, Entrepreneur, Marketing, Management, Technical and Human Resources. Photos by Gino Demeer.

Upcoming tech talent share insights at inaugural Emerging Leaders Forum 2019
Show Comments