G20 countries plan on new tax policy for internet giants

According to the Nikkei business daily report, the G20 countries plan on new tax policy for big internet giants like Google, based on the business of the company in the country compared to where its headquarters are, as the international tax rules that were formed were old.

Also, read: Samsung Galaxy M40 specs leaked ahead of the official launch

The Group of 20 countries finance ministers will be signing the basic policy when they meet in the city of Fukuoka on June 8-9 ahead of the main G20 meeting that is scheduled in Osaka.

This policy will target large internet firms like Apple, Google, Facebook and Amazon by which it will allocate revenue to countries that offer large user bases for the world's digital corporate giants. The G20 countries will seek to reach the final agreement in 2020, but it still needs to be finalized as to how the policy will work.

One probability could be to distribute collected tax revenues to countries based on the number of users a company has in each country, which means that Facebook that has centralized its profits and tax payments in Ireland in order to take advantage of low rates would see its tax payments redistributed to areas with a large user base.

Right now Facebook has more than 1.4 billion users globally that include 490 million in the Asia-Pacific region, 270 million in Europe and 180 million in North America. The social media giant has been criticized to review its tax strategy and move towards calculating income in each country where it operates.

The US, UK and other emerging economies have presented a proposal for discussion among G20 members wherein all call for the same basic method of taxing and tax revenue to get distributed to countries where users of digital services reside.

According to the Paris-based Organisation for Economic Co-operation and Development (OECD), they are already trying to forge a new global agreement that will prevent firms from declaring their income in low-tax jurisdictions, by which they usually deprive other countries billions in revenue.

The French lawmakers passed the first reading of a bill in April to impose taxes on digital ads, sale of personal data and other revenue for any tech company that earns more than €750 million worldwide every year.

Austria too has proposed similar domestic legislation, but in a bid to agree to the law, the European Union level was displeased by the low-tax countries like Ireland that had attracted the big tech companies.

Olaf Scholz, the German Finance Minister said earlier this month that he anticipated the OECD to agree to a minimum level of taxing in context to digital companies like Google, Amazon and Facebook by mid-2020 and introduce a financial transaction tax in at least nine EU countries.

France has offered to assist finance the future budget for the eurozone from taxes on digital companies, but there are some countries that remain cautious of the move unless it is supported globally.

Also, read: Nokia 3 (2017) starts receiving Android 9 Pie update