Multinationals face heftier tax hit in biggest overhaul for decades

Investment Guru India

By Leigh Thomas

PARIS- Governments will get more power to tax big multinationals like Google, Apple and Facebook doing business in their countries under a proposed overhaul of decades-old rules.

Big internet firms have pushed tax rules to the limit as they can book profit and park assets like trademarks and patents in low tax countries like Ireland wherever their customers are.

The drive for a global rule book has received new urgency as countries unilaterally adopt plans for a tax on digital companies over frustration with current rules.

This year more than 130 countries and territories agreed that a rewriting of tax rules largely going back to the 1920s was overdue and tasked the Paris-based Organisation for Economic Cooperation and Development (OECD) to come up with proposals.

"The current system is under stress and will not survive if we don't remove the tensions," OECD head of tax policy Pascal Saint-Amans told journalists.

The OECD expects the first sign of whether there is broad political support behind their proposals next week when finance ministers from the Group of 20 economic powers discuss them at a meeting in Washington.

The overhaul would have an impact of a few percentage points of corporate income tax in many countries with no big losers apart from big international investment hubs, Saint-Amans said.

While that means countries like Ireland or offshore tax havens could suffer, countries with big consumer markets like the United States or France would benefit from the shake-up.

France adopted its own national tax on digital companies this year, sparking U.S. threats of tariff on French wine and adding to global trade tensions.

Meanwhile, companies are facing increased uncertainty about their tax bills as countries challenge arrangements to pay tax in countries like Ireland rather then where their markets are.

Apple is locked in an EU tax dispute over profits booked in Ireland which could cost the iPhone maker $14 billion. Meanwhile, Google agreed last month to pay more than $1 billion to settle a tax case in France.

Amazon, which the European Union has told to pay about 250 million euros in back taxes to Luxembourg, said the OECD proposals were an "important step forward".

TAX REVOLUTION

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