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(Adding quotes from Japanese and European finance ministers)
* G20 agrees to pursue tax reform
* Many feel that the tax burden of large technology companies is unfair
* Washington fears US companies are targeted
By Stanley White and Jan Strupczewski
TOKYO, June 9 (Reuters) – Finance ministers agreed on Sunday to set common rules to close loopholes used by global tech giants such as Facebook to reduce corporate taxes, the final statement said on Sunday. of the group.
Facebook, Google, Amazon and other major technology companies are being criticized for reducing their taxes by recording profits in low-tax countries, regardless of where the end customer is located . Many people consider these practices to be unfair.
The new rules would result in a heavier tax burden for large multinational corporations, but would also prevent countries such as Ireland from attracting foreign direct investment by promising extremely low corporate tax rates.
"At the moment we have two pillars and I think we need both these pillars at the same time to make it work," Japanese Finance Minister Taro Aso, who chaired the G20 meetings, told the press.
"The proposals are still a little vague, but they are gradually taking shape."
Britain and France have been among the strongest proponents of proposals to make it more difficult to transfer profits to low-tax jurisdictions, with a minimum corporate tax also included.
This put the two countries in disagreement with the United States, which has expressed concern that US Internet companies are unfairly targeted by a major campaign to update the global code of corporate taxation.
The big Internet companies claim to follow tax rules, but they pay little tax in Europe, usually channeling sales via countries such as Ireland and Luxembourg, which apply lighter tax regimes.
"We welcome recent progress in solving the tax problems related to digitization and endorse the ambitious program of a two-pillar approach," said Sunday's G20 statement.
"We will redouble efforts to find a consensual solution with a final report by 2020".
The "two pillars" of the G20 could give a double blow to some companies.
The first pillar is a tax-sharing plan of a company where its goods or services are sold, even if it is not physically present in that country.
If companies are still able to find a way to account for their profits in low tax havens, then countries could apply a global minimum tax rate to be agreed in the second pillar.
"I see a great willingness to work together on this issue, which few people could have anticipated a year ago," said Pierre Moscovici, Commissioner for Economic Affairs of the European Union.
"We sincerely believe that technology giants, who are not just GAFA, must pay their fair share of taxes where they create value and benefits."
GAFA is an acronym commonly used to refer to Google, Amazon, Facebook and Apple when it comes to the influence of big tech companies. (Report by Stanley White edited by David Goodman)
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