RIYADH • Leading world economies must unite to deal with aggressive “tax optimisation” by global digital giants like Google, Amazon and Facebook, Group of 20 (G-20) officials said yesterday.
Global rules are being developed by the Organisation for Economic Cooperation and Development (OECD) to make digital firms pay tax where they do business, rather than where they register subsidiaries.
The OECD says this could boost national tax revenues by a total of US$100 billion (S$140 billion) a year.
The call for unity appeared directed mainly at the United States, home to the biggest tech companies, in an attempt to head off any stalling on the rules until after the US presidential election in November.
“There is no time to wait for elections,” German Finance Minister Olaf Scholz told a tax seminar on the sidelines of a meeting of G-20 finance ministers and central bankers in Riyadh.
“This needs leadership in certain countries,” Mr Scholz said, looking directly at US Treasury Secretary Steven Mnuchin, sitting next to him.
The OECD wants to set a minimum effective level at which such firms would be taxed and seeks an agreement by the start of July, with an endorsement by the G-20 by the end of the year.
“A coordinated answer is not the better way forward, but, given the alternatives, the only way forward,” OECD head Angel Gurria told the seminar.
But the OECD’s efforts were stalled last year by changes demanded by Washington, which many G-20 officials view as reluctant to deal with a potentially politically tricky matter before the presidential election.
Mr Mnuchin said OECD countries were close to an agreement on the minimum tax level, which he said would also go a long way towards resolving the issue of where tax is paid.
“I think we all want to get this done by the end of the year, and that’s the objective,” Mr Mnuchin told the seminar.