G20 agrees to end Big Tech tax rules by 2020

Group of 20 Finance Ministers
agreed Sunday to compile common rules to fill in the gaps used
by global technology giants such as Facebook to reduce their
corporate taxes, a final release issued by the block showed
Sunday.

Facebook, Google, Amazon and other major
technology companies are criticized for reducing their taxes
by recording profits in low-tax countries, regardless of
location of the end customer. These practices are considered by many to be
unfair.

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

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

Britain and France were among the most vocal supporters
proposals to make it more difficult to transfer profits to
jurisdictions with low tax rates, with a minimum corporate tax also
mix.

This put the two countries in conflict with the
United States, which is concerned about the fact that the American Internet
companies are unfairly targeted in a vast campaign of update
the global code of corporate taxes.

"Two-pillar approach"

Big Internet companies say they respect tax rules, but
pay little tax in Europe, usually by channeling sales via
countries like Ireland and Luxembourg, which have light systems
tax regimes.

"We welcome the recent progress in the processing of the tax
challenges posed by digitization and endorsed the ambitious
program that consists of a two-pillar approach "on G20 Sunday
release said.

"We will redouble efforts for 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 division plan of the taxing rights
company where its goods or services are sold, even if it does
not have a physical presence in this country.

If companies still manage to find a way to account for their profits
tax havens, countries could then apply a minimum global tax
rate to be agreed in the second pillar.

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

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

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

Source: TRTWorld and agencies