7 March 2020 | New Scientist | 21generally in favour. If they don’t
reach an agreement by the end
of the year, countries that have
already put forward proposals for
so-called digital services taxes are
likely to reinstate or implement
their own unilateral taxes anyway.
Michael Devereux at the
University of Oxford believes the
latter is the most probable option
for politicians. “I think they’ve
made enormous progress given
where they started and the
difficulties of doing it, but they’ve
got a very tight timescale,” he says.
The next OECD meeting on the
tech tax will take place in Berlin
in July, where the participants
hope to thrash out the key policy
features of a global solution and
sign a political agreement that
would be delivered to G20 heads
of state in November 2020.Like and share
The bosses of big tech firms are
recognising that something has
to change. “I understand that
there’s frustration about how tech
companies are taxed in Europe.
We also want tax reform and I’m
glad the OECD is looking at this,”
Facebook CEO Mark Zuckerberg
said last month. In January,
Apple boss Tim Cook said that
he “desperately” wanted the tax
system to be “fair”. Facebook and
Alphabet, the parent company of
Google, both declined to comment
for this story. Apple didn’t respond
to requests for comment.
It makes sense for tech
executives to throw their
support behind the OECD scheme.
“It’s in their interest and from a
tax certainty perspective, it’s
definitely better for them to have
one international solution,” says
Voin. “The economy has changed,
and the fiscal principles haven’t
changed.” If the OECD gets its way,
they soon will. ❚worst tax avoiders still contribute
to the countries they operate in:
they add employment, investment
through data centres or logistics
and warehouse facilities, and pay
out salaries that are taxed through
income tax. “If you tax away the
capacity of the companies to do
this, you lower the impact of their
activities,” he says.
At the G20 meeting, the US
cautioned against the OECD plan,
while European nations wereTOP:^ JAK
EOLIMB/GET
TY
IMAGES
;^ BOTTOM:^ CORONAsays Pascal Saint-Amans, director
of the OECD Centre for Tax Policy
and Administration.
Google says its overall tax rate
has been 23 per cent for the past
decade, similar to the average
statutory rate across OECD
countries, but the OECD thinks
it and firms like it should be
paying more. Tech giants have
profit margins of about 20 per
cent compared with the global
average of 8 per cent for listed
companies, according to the
OECD. It says these excess profits
should be distributed to the
markets where those goods
are sold, rather than being kept
in their home jurisdiction,
generally the US or China.
Not everyone shares this view.
“Countries sense that [big tech
firms] are making a lot of money
in terms of revenue but also profit
in jurisdictions in which they do
not pay a certain ‘fair share’ of
tax,” says Matthias Bauer of the
European Centre for International
Political Economy, a free-trade
think tank based in Brussels
that is opposed to the notion of
introducing tech taxes.
Bauer argues that the
companies often fingered as the
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newscientist.com/insightA number of countries have started or are considering
a new tax rate on tech firm revenues
SOURCE: KPMG RESEARCH; CREATED WITH DATAWRAPPERFrench finance minister
Bruno Le Maire talked tax
at a recent G20 summitAHMED^ YOSRI/
RE
UTER
S/PA^ IMAGES