OECD: 137 countries agree to rewrite international tax rules by 2020

For years, the tech giants have relied on prudent tax planning strategies that use low-tax locations, but a new move by the Organisation for Economic Co-operation and Development (OECD) means that at least 137 countries are willing to work together to update international tax rules for the complex digital industry,media reported. Governments in 137 countries have begun to overhaul international tax laws targeting tech giants and other multinationals.

OECD: 137 countries agree to rewrite international tax rules by 2020

The initiative is aimed at preventing a new trade war, as many of the countries concerned are already developing their own programmes or have passed laws.

The plan was announced by the Organisation for Economic Co-operation and Development in October 2019 after preliminary negotiations on changes to tax legislation dating back to the 1920s.

Those involved have already begun submitting proposals, and officials from those countries will meet in Paris for negotiations.

The OECD says there is an urgent need to draft a draft as soon as more countries rush to enact their own “digital taxes”. A typical example is France, whose digital tax is used in a pledge by US President Donald Trump to impose an import tax on $2.4 billion worth of French products.

Tech giants such as Apple, Google, Amazon and Facebook have been using low-tax locations such as Ireland for years to avoid cutting profits.

France hinted earlier this month that it might delay plans for an e-tax until the end of the year, largely because of the insistence of other EU member states. At the same time, the OECD must come up with at least one preliminary consensus-based solution that will be available to companies that operate online search engines, social media platforms, online markets, streaming services, cloud computing and advertising.

So far, both Amazon and Apple have expressed support for the OECD’s efforts, mainly because it would be an important step in preventing double taxation and unilateral distortions.

Apple CEO Tim Cook said: “Logically, everyone knows it needs to be fixed, and I’m sure the last person to say that the current or past system is the perfect system.” I am hopeful and optimistic that the OECD will be able to find something. “