World governments 'moving fast' to overhaul taxes for tech giants
A consortium of 137 countries has agreed to revamp tax rules to close decades-old loopholes for multinational corporations. It's prompted by the rise of digital firms but Apple, for one, has been a vocal supporter of reform.
Apple's Champs-Elysees store in Paris, the city where this week's OECD talks have been held
The Organization for Economic Cooperation and Development (OECD) has announced that officials from 137 governments have agreed to launch new negotiations that will potentially see international tax laws radically revamped.
Current tax laws have not been substantially changed in decades, but the enormous rise of digital firms has put the system under pressure. When the tax laws were created, they were founded on the assumption that multinational firms would have a physical presence in each territory where they operated.
With digital firms, this is no longer true and it's created loopholes. Corporations can choose to pay tax through any country where they do have an office, so they can also elect to pick the country with the lowest tax fees.
Apple, although a vocal supporter of tax reform, has benefited from this too, with its European operation effectively being taxed as if it's all going through the company's offices in Ireland.
While that specific example has resulted in Apple becoming embroiled in legal dispute with the European Union, Tim Cook has recently been promoting tax reform of the type now proposed.
"I think logically everybody knows it needs to be rehauled, I would certainly be the last person to say that the current system or the past system was the perfect system," said Cook before today's news. "I'm hopeful and optimistic that [the OECD] will find something."
Now, according to Reuters, the OECD has gathered enough support at its Paris talks to announce the group proposals.
Pressure to reform the tax system has been growing so much that countries such as France have introduced or proposed their own reforms rather than wait for consensus. These moves, though, have added to what the OECD sees as a need for urgent negotiations.
"It's moving fast because what is at stake is a massive trade war," Pascal Saint-Amans, OECD head of tax policy, told Reuters. "This is what we see on a daily basis with the interaction between France and the U.S. and with the interaction between the U.S and the countries that have said they would launch digital services taxes."
France has decided to postpone its new digital tax while the French and US governments are in trade discussions. That truce will continue to the end of 2020.
It's not yet known when the OECD believes governments can agree and implement reforms.
Apple's Champs-Elysees store in Paris, the city where this week's OECD talks have been held
The Organization for Economic Cooperation and Development (OECD) has announced that officials from 137 governments have agreed to launch new negotiations that will potentially see international tax laws radically revamped.
Current tax laws have not been substantially changed in decades, but the enormous rise of digital firms has put the system under pressure. When the tax laws were created, they were founded on the assumption that multinational firms would have a physical presence in each territory where they operated.
With digital firms, this is no longer true and it's created loopholes. Corporations can choose to pay tax through any country where they do have an office, so they can also elect to pick the country with the lowest tax fees.
Apple, although a vocal supporter of tax reform, has benefited from this too, with its European operation effectively being taxed as if it's all going through the company's offices in Ireland.
While that specific example has resulted in Apple becoming embroiled in legal dispute with the European Union, Tim Cook has recently been promoting tax reform of the type now proposed.
"I think logically everybody knows it needs to be rehauled, I would certainly be the last person to say that the current system or the past system was the perfect system," said Cook before today's news. "I'm hopeful and optimistic that [the OECD] will find something."
Now, according to Reuters, the OECD has gathered enough support at its Paris talks to announce the group proposals.
Pressure to reform the tax system has been growing so much that countries such as France have introduced or proposed their own reforms rather than wait for consensus. These moves, though, have added to what the OECD sees as a need for urgent negotiations.
"It's moving fast because what is at stake is a massive trade war," Pascal Saint-Amans, OECD head of tax policy, told Reuters. "This is what we see on a daily basis with the interaction between France and the U.S. and with the interaction between the U.S and the countries that have said they would launch digital services taxes."
France has decided to postpone its new digital tax while the French and US governments are in trade discussions. That truce will continue to the end of 2020.
It's not yet known when the OECD believes governments can agree and implement reforms.
Comments
We all know the answer to that one.
Call me crazy but how about we just have a consumption tax? The more you consume the more you pay. No loopholes. No bureaucrats to 'manage' the complex tax laws. No accountants creatively figure out ways around the complex tax laws, and no lawyers to defend them when they do.
Too simple?
I suppose if you advocate the rich getting richer it sounds like a perfect plan.
(Just a lot of bogus noise. If cross-border coordination on taxes was easy to get done, it would have been done already. Even an economic common area such as the EU cannot get it done.)
Good luck. The people who decide to impose more taxes.... want more taxes, not less.
Income tax has been around 100 years and is one of the biggest contributor to the raise in the quality of life for most Americans.
spice-boy said: Not if the consumption tax (not sales tax) is applied unilaterally. EVERYONE pays no matter where they buy.
StrangeDays said: There are people who debunk the iPhone. Does that mean Apple should cancel it? This is the beauty of the consumption tax. You don't purchaser anything you don't pay a tax. Perfect idea because now EVERYONE pays and no one doesn't. Now that EVERYONE pays EVERYONE will start paying attention to how government spends the money it collects.
Why is this so hard for socialists/communists to figure out?
Please provide the definition of what socialism is? Is Social Security socialism? Do you plan on being a socialist when you retire and get you benefits? Is social security a good or bad thing? You throw around terms you that have no clue to their real world meaning.
not a chance! At least not in the USA. Deficit spending has resulted in huge liabilities, if any thing your tax rate will need to go up. This especially the case if some of the social programs suggested by the more liberal parties end up becoming reality. We really need a cut in social spending of at least 75% to balance out the spending vs income.
This is easy, Social Security is a bad thing if it leads people to believe that the government will meet all their needs in retirement. If you want to understand how hideous socialism can be look into China and the health care system there. In any event it is pretty clear that socialism has a poor track record and has lead to the down fall of many countries. Contrary to popular opinion we did not defeat Russia, rather Russia was defeated by the worse aspects of socialism. Socialism literally sucks the life out of individuals, eliminating drive and work ethic.