CBI hails global tax plans for tech giants

Proposals by the Organisation for Economic Cooperation and Development (OECD) for a global crackdown on tech giants' avoidance of corporate tax bills have been welcomed by the UK's largest business group.

Image of a mobile phone screen showing multiple apps including Facebook and Apple
The Confederation of British Industry (CBI) described the plan, which aims to stop the likes of Google, Facebook and Amazon shifting profits to low-tax locations around the world, as "a big step forward".Earlier this year, more than 130 nations tasked the Paris-based OECD to come up with proposals to overhaul tax rules. The proposals will now be put out to consultation and are likely to be high on the agenda when G20 finance ministers meet in Washington next week.

Digital Services Taxes

The UK government has already come up with its own plan for a digital services tax (DST), which is due to come into force next April, but which ministers have previously indicated they would scrap if a global solution was found.France has already introduced its own DST, despite opposition and the threat of sanctions from the US whose leaders see the tax as an assault on the profitability of mainly American tech firms.Such a threat has also raised concerns in the UK in case a unilateral adoption of the DST represents another barrier to reaching a post-Brexit trade deal with the US.However, a spokesman for the OECD said the US administration was "fine" with the latest proposals as they would apply not just to tech firms but to all multinationals' business.The new rules proposed by the OECD would enable governments to levy more tax on cross-border companies with revenues of more than €750 million, based on the income from sales in their countries.Ángel Gurría, secretary-general of the OECD, said, “This plan brings together common elements of existing competing proposals, involving over 130 countries, with input from governments, business, civil society, academia and the general public. It brings us closer to our ultimate goal: ensuring all multinational enterprises pay their fair share.

A global unified approach is best: CBI recommends the UK government scrap plans for Digital Services Tax

“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.”Annie Gascoyne, director of economic policy at the CBI, commented, “The proposals put forward by the OECD for a unified approach to the digitalisation of the economy are a big step forward.“Governments and business agree that the OECD is the right organisation to lead this reform of the international tax framework for the digital age.“The (British) government’s current proposed Digital Services Tax would be unilateral action that could impact many more businesses than intended and would do little to encourage business adoption of new technologies.“In light of the clear progress at the OECD, we would urge the UK government to put their current plans on hold.”

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