No deal on global digital tax this year: OECD

PARIS: The 137 nations trying to hammer out a new global standard for taxing multinational tech firms will not secure a deal by the end of this year as hoped, the OECD acknowledged on Monday.

“The glass is half full: the package is nearly ready but there is still no political accord,” said Pascal Saint-Amans, head of tax policy at the Paris-based Organisation for Economic Cooperation and Development. But the OECD does expect to finalise a “digital tax” proposal “sometime in 2021,” Saint-Amans added, although he acknowledged persistent US resistance to the plan.

Talks have been labouring on for the past two years on how to ensure that tech giants pay a fair share of taxes in the countries where they operate, even if their headquarters

are elsewhere.

Public pressure has been growing on governments to clamp down on the tax avoidance strategies used by multinationals such as Google, Amazon, Facebook and Apple—the so-called “GAFA” — who are accused of shifting their profits to countries with lower tax rates.

The coronavirus crisis hindered progress this year on implementing a levy, even though “the Covid-19 pandemic makes the need for a solution even more compelling,” the OECD said. Failure to reach a global agreement could prompt some countries to go it alone on digital taxation.

Several European countries including France and Britain have already announced their own levies in the absence of a global accord. That has infuriated Washington, which says American companies are being unfairly targeted.

“Despite the exceptional circumstances, there are a lot of strong feelings and impatience, and the temptation to take unilateral action faced with a measure that will take years to implement,” Saint-Amans said at a press conference at the OECD’s headquarters in Paris.