February 28 (UPI) — India is pushing the Organisation for Economic Co-operation and Development (OECD) to make major changes to the way it sets taxes in each jurisdiction in the hope of taking a bigger share of the taxes paid by multinationals such as Google, Facebook, Amazon and Netflix,media reported.
The OECD recently said that if all countries enacted and adopted new tax rules, the taxes paid by large digital companies could increase by about $100 billion. To get a bigger share from it, India is pushing to determine the tax payable by digital giants in some countries based on the number of users.
According to the OECD, multinationals take advantage of international tax rules and tax system differences and tax loopholes to minimize the amount of tax they pay globally as a whole, known as tax base erosion and profit shifting (BEPS). As a result, the tech giant shunned $100 billion in taxes worldwide.
“Some companies have received billions of dollars in revenue from India, but they are trying to avoid paying taxes, ” said an Indian official familiar with the developments. We just want these companies to pay a fair share of their taxes to India. He added that the government had been pushing the effort and would soon submit proposals to the OECD.
If a country has the right to tax companies based on intellectual property rights or the number of users registered in that country, the OECD will participate in the assessment. People familiar with the matter said India was actively supporting a tax based on the number of users, which could mean companies around the world would have to pay more tax.
In addition, the OECD requires these companies to pay at least 12.5 per cent tax in each country, another victory for India, where most companies pay only about 6 per cent of their income (equilibrium tax).
Companies such as Google, Facebook and Amazon have all created unique structures through which they end up paying no tax in India, where profits are quickly transferred to tax havens such as Ireland and the Cayman Islands through creative holding structures.
Rajesh J. Rajesh H Gandhi, chief executive, said: “Under the framework proposed by the OECD, the tax burden on several multinationals in India is likely to increase because even if they do not have a large number of local businesses in India, they will start paying taxes in countries such as India.” Developing countries such as India are expected to benefit more than developed countries. “
Tax experts say India has done a good job of accepting the OECD’s guidelines, which introduced a basic framework for a “major economic presence” or a digital permanent body (PE) in 2018. In this year’s budget, the government said it was waiting for OECD guidelines before introducing them into domestic regulations.
Industry experts say India could see a big increase in tax revenues from next fiscal year if the OECD’s guidelines are accepted by 130 member countries.