G20 agrees to increase efforts to tax technology giants
One of the major difficulties with the rise of technology companies is the taxation of them. Due to the wide range of products that some of these companies offer, the many jurisdictions in which they are active, and the unclear regulations on how and where these companies should be taxed, they often devise structures in order to minimise the overall tax bill.
This is much to the dismay of large economies, who are often left with significantly less tax revenues due to the technology companies’ manoeuvres.
Recently, however, the G20 – a group of the twenty largest economies in the world – agreed they need to find a common method to tax technology giants, whose digital business models been one step ahead of the tax system at every turn.
“We agreed on a need to redouble our efforts to reach consensus by 2020. Should we fail to meet our commitment, we will see more and more unilateral actions and the fragmentation of the international tax system.”Masatsugu Asakawa, Japanese Vice Minister for Finance
Taxing technology companies will naturally put a larger financial burden on them which could have positive and negative consequences. On one hand, it will raise government treasuries, which would hopefully governmental pressure and see them spending on the welfare of citizens. On the other hand, tech giants could sell more ads (personal data), stock markets and potentially slow down the world economy.
Through the cooperation between the large economies, the ministers aim to come up with a consensus on how to proactively tax the technology companies in an agreed upon manner. Read more about the plans and the difficulties therewith here.
