Little Consensus On Taxation Of The Digital Economy
Thousands of words have been written across countless pages by the OECD to describe, analyze, and consider the tax challenges of the digital economy. Yet it took only a 97-word press release from United States Treasury Secretary to potentially consign them all to the trash can. He might as well have used Twitter.
Of course, Mnuchin’s statement, and the publication by the European Commission of a proposal for an interim digital tax, won’t kill the OECD’s work in this area any time soon.
Nevertheless, these developments tell us pretty much straight away that the OECD will struggle to attain the multilateral consensus that will be required to ensure that any new tax digital measures are workable. Statements issued by various EU member states, and also Switzerland, inform us of that.
While businesses and tax practitioners against this interim measure might hope these schisms might eventually scupper the introduction of interim measures, a lack of a multilateral consensus may encourage individual jurisdictions to fill the vacuum. And the EU isn’t the only one with itchy fingers (or should be itchy digits?)
True to form, the Unilateral Kingdom – sorry, I think that’s what you call a Freudian slip. I’ll start again: true to form, the United Kingdom included options for a digital excise tax in the updated version of its working paper on corporate tax and the digital economy, and Canada has also announced that it is studying the issue. Doubtless, we’ll read about similar developments at jurisdictional level in the coming weeks and months.
An interesting aside: the Unilateral Kingdom (it might as well be as far as the BEPS project is concerned) was named recently as one of the countries that has provided support to the Platform for Collaboration on Tax. How ironic. That’s a little like saying Brazil has contributed to a workshop on tax simplification for developing countries.
Nevertheless, the fact that such initiatives exist for the promotion of international collaboration on tax shows how important it is for everyone to be pulling in the same direction if the desired outcomes are to be achieved. It’s a shame, therefore, that the PCT is a joint venture of a group of plurilateral non-governmental organizations, including the OECD, the IMF, the World Bank, and the UN, rather than the governmental ones that need to do the actual collaborating.
Still, if nothing else comes out of the OECD’s digital tax work, at least we’ll have a new acronym to add to the rich lexicon of abbreviations in the world of taxation, courtesy, by the looks of things, of the European Union – GAFA, or Google, Amazon, Facebook, and Airbnb, those companies most in the sights of the digital taxers. It has a certain ring to it I suppose. A little too close to “gaffe” for comfort perhaps…?
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look