The Paris-based Organisation for Economic Cooperation and Development (OECD) is spearheading an effort to develop effective tax policies for the digital era in which internet giants are able to book profits in low-tax countries rather than where the customer is located.
This campaign has an EU dimension with France and the UK moving unilaterally to introduce their own legislation to tax predominantly American digital behemoths, including Facebook, Amazon, Google, and Microsoft. F
France, however, failed to broker an EU-wide agreement after meeting stiff resistance from Ireland, Malta, and the three Baltic states of Estonia, Latvia, and Lithuania.
The newest part of the equation is that Washington may be willing to join the consensus in redefining the global tax regime while opposing unilateral tax levies similar to those imposed by France, Washington is open to a negotiated multilateral solution with a wider scope than digital infrastructure.
The US Treasury’s most senior international tax official, Chip Harper, is quoted as telling the press that Washington is working within the OECD’s framework towards an international agreement by June, aiming for the conclusion of a formal deal by 2020.
Among other things, the OECD-brokered deal is set to minimum rates of corporate taxation, potentially ending a race to the bottom between developed economies.