After talks this week in Paris, the Organization for Economic Cooperation and Development (OECD) said on Friday that nearly 140 governments have agreed to launch a rewrite of decades-old international tax rules for the digital age.
Tax officials from 137 governments agreed at a meeting in Paris to launch negotiations on new rules for where tax should be paid and what share of profit should be taxed when big digital and other consumer-facing businesses do not have a physical presence in the market, the OECD said.
A growing number of countries are preparing national digital taxes in the absence of a major redrafting of current rules, despite threats from Washington to hit them with retaliatory trade tariffs because it sees such levies as discriminatory against big U.S tech groups.
“It’s moving fast because what is at stake is a massive trade war,” OECD head of tax policy Pascal Saint-Amans told journalists in Paris.
MacDailyNews Note: Apple CEO Tim Cook backs changes to the global corporate tax system, agreeing with the general consensus that global tax rules need to be overhauled:
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. I’m hopeful and optimistic that they (the OECD) will find something. — Apple CEO Tim Cook, January 20, 2020
This is one of those cases of “Be careful what you wish for.”
It’s easy to agree that the tax system needs to be overhauled but that doesn’t mean what you end up getting will be better.
Almost ANY agreed international tax system would be better than 137 incompatible national tax regimes.
Well said.
It is disturbing how many people think that extreme nationalism, hiding behind feudal walls, could ever be somehow more prosperous than engaging in international cooperation. At this stage in civilization, we should know that all economies are interconnected and undemocratic entities like corporations cannot be entrusted to run roughshod over the world, buying whatever regulatory framework they like in the most corrupt corners of the planet.
Let’s not pretend, as many here do, that the gambling den of wall street is the economy. Inflating that bubble is a very bad goal. Human health and well-being, removing resource wars and friction and strife, would pay much better dividends over the long term. Think of what domestic improvements could be accomplished with, say, a 10% reduction in global military budgets! It could be achieved if the US led peace delegations instead of sabre rattling incessantly as it has the last 3 years especially.
Some people think taxation is theft. Is it theft when you use public facilties like roads, bridges and so forth? At some point we have to stop the bickering and balance the accounts. Cost of society never goes down unless humans choose to consume less. But not only is that never an option chosen, several generations have refused to pay for their overconsumption, racking up a serious debt. The current deficit is worse than ever before in US history, and in the UK, they have chosen to drive off a cliff. Elsewhere around the world, (MX, DE) economies are actually in recession.
It should be abundantly clear that tariffs didn’t spur improvements to US factories and infrastructure. The Orange Liar revolution acted solely as a cash infusion for the financial elites, as intended. Wage growth remains pathetic while billionaires bought back more of their own stock, added a few new Porsches to their garages, and hid the rest in the Cayman Islands. Trickle down and mass deregulation didn’t work (again!) to spur the real economy. If it had, everyone would feel it. That hasn’t happened, tax receipts plummeted. Like the vast majority of consumers, governments responsible for paving your roads and policing them are still running deficits. At some point the taxes required for paying back the debts will be too much to bear. As it is, with massive stimulus and an Orange pep rally tweeter on the rampage without accountability, the US economy can only sustain a ~2.1% economic growth rate. If you want more, then the only way to get it is to shake loose all the overseas hoarded cash and get it circulating again among EVERYBODY.
Apple, sadly, has acted just like every other huge multinational: in its quest to minimize cost of doing business and tax avoidance, it has many layers of shell companies that do nothing but launder money overseas. Its production has all been moved intentionally to Communist China so it doesn’t have to pay workers prevailing wages anywhere else. Then Apple pretends it couldn’t possibly afford to spread the wealth or lower its increasingly obscene pricing.
It would be preferable to incentivize companies like Apple to stop hoarding money overseas and put it to work in the communities where you live … so close the global loopholes already.
Darn sure don’t want any of those politicians running out of money. Just think of how many of them there are…
Must feed all those hungry bureaucrats.
Ok, Bob and Sherm, since you don’t like taxes, what is your alternative?