Internet giants are spooked by global tax crackdown plans as they demand more details on ‘biggest shake-up of rules in a century’
- Organization for Economic Cooperation and Development proposed a shake-up
- It would force big businesses to pay more in places they make ‘significant’ sales
- OECD said it was necessary to make international tax system fit for digital age
- But tax chiefs have now called for more critical details regarding the changes
- The group of the world’s richest nations is to meet in Paris at the end of the week
Internet giants have been spooked by global tax crackdown plans as they demand more details on the ‘biggest shake-up of rules in a century’.
The Organization for Economic Cooperation and Development (OECD) proposals would force consumer-facing businesses to pay more in countries where they make ‘significant’ sales and profits – even if they do not have a physical presence there.
The group of the world’s richest nations, which is set to meet in Paris at the end of the week, said the overhaul was necessary to make the international tax system fit for the digital age.
The OECD (pictured, Secretary General Jose Angel Gurria, left, and French President Emmanuel Macron, centre in Paris earlier this month) proposals would force consumer-facing businesses to pay more in countries where they make ‘significant’ sales and profits – even if they do not have a physical presence there
It comes amid mounting anger at multinationals that cynically shift profits around the world to minimise bills, with internet giants accused of being some of the worst offenders.
Tax chiefs have called for more critical details about the biggest shake-up of tax rules in a century, while critics claimed the proposals did not go far enough.
Music-streaming company Spotify AB said according to the Wall Street Journal: ‘Before deciding on the final proposal, we encourage the OECD to clarify a number of issues.’
Uber Technologies Inc also called for more details, arguing the current document is only suitable for discussions.
Crackdown: Apple chief exec Tim Cook, left, and Facebook boss Mark Zuckerberg, right, look set to be squeezed for more tax thanks to the OECD shake-up
And Amazon added the digital economy should not be the only ones targeted by the new tax plan, a letter signed by vice president for global tax Kurt Lamp said.
The OECD has pushed for a global agreement on the issue after several countries, including the UK, threatened to impose their own taxes.
It said the plans, published last month, were the result of talks involving some 130 nations.
But they must be agreed by governments before implementation.
Jose Angel Gurria, the OECD’s secretary general, said last month: ‘We’re making real progress to address the tax challenges.
‘Failure to reach agreement by 2020 would greatly increase the risk that countries will act unilaterally, with negative consequences on an already fragile global economy. We must not allow that to happen.’
Nearly £200billion is lost from tax revenues every year because of avoidance efforts by multinationals, says the OECD.
It claimed its proposals amounted to the biggest shake-up of corporate tax rules since the 1920s.
European regulators have targeted companies including Apple and Amazon over tax, arguing they struck illegal ‘sweetheart’ deals with the Irish and Luxembourg governments and ordering them to pay back billions.
But the OECD said the problem should be tackled by a new system that would see firms pay a country taxes based on how much business they did there, regardless of whether they had staff or offices there.
Countries like the UK, where technology firms rake in billions of pounds, stand to benefit from the proposal whereas low-tax jurisdictions such as Ireland and Luxembourg would lose out.
But the idea could still become derailed if battles break out between countries over how the new rules will be defined.