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Mixed Response To OECD's New Digital Tax Agenda

by Mike Godfrey,, Washington

19 March 2018

Following on from the OECD's webcast on the way forward on the taxation of the digitalized economy, the US Treasury has announced its opposition to proposals for destination principle-based taxes on digital firms.

The OECD said March 16 that more than 110 countries and jurisdictions have agreed to review two key concepts of the international tax system, as part of the OECD's response to a mandate from the G20 Finance Ministers to work on the implications of digitalization for taxation, towards a consensus-based solution by 2020. The proposals will aim to enhance tax rules on digital firms and ensure taxation in the location where they derive income – that is, where their users are based.

US Treasury Secretary Steven Mnuchin responded to the announcement, stating: "The US firmly opposes proposals by any country to single out digital companies. Some of these companies are among the greatest contributors to US job creation and economic growth. Imposing new and redundant tax burdens would inhibit growth and ultimately harm workers and consumers. I fully support international cooperation to address broader tax challenges arising from the modern economy and to put the international tax system on a more sustainable footing."

Meanwhile, Will Morris, Chair of the Business and Industry Advisory Committee to the OECD (BIAC), said: "Digitalization is the key to future growth, so a structured conversation with a very broad group of countries aimed at global solutions is now urgent. Unilateral action would only lead to costly fragmentation, double (or multiple) taxation, and harmful barriers for our economies."

BIAC commended the OECD for taking the initiative on this area of tax policy, stating: "BIAC applauds the forward-thinking, multilateral approach of the OECD, which aims to deliver a global consensus on taxation of the digital economy to facilitate and not hinder cross border trade, investment, and growth. BIAC will continue to engage with the OECD and governments on digital taxation issues going forward, and points to the OECD Inclusive Framework on taxation that includes more than 100 countries and territories as the most appropriate forum for this pertinent issue."

TAGS: Finance | tax | investment | transfer pricing | United States | G20 | trade | BEPS

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