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Summary
- The EU officials have hinted that an agreement on global tech tax may be signed during this summer season.
- This has come up after the new US administration gave a positive signal regarding introduction of the tax system.
A global tech tax is in the works, which means tech giants around the world will be hit with higher taxes, after the European Union officials had a detailed discussion with US treasury secretary Janet Yellen and German Finance Minister Olaf Scholz over the issue.
Scholz said that he was confident that an agreement can be closed between the countries for a new global tax to be levied on tech giants. He has also promised that the US will actively take part in the upcoming negotiations with other OECD nations.
(Image Source: © Kalkine Group 2020)
The OECD is looking forward to having an international agreement on how to tax tech giants after the talks failed in 2020. Olaf said that the new Joe Biden’s administration has prioritized on the need for an agreement in this area.
It has been more than a decade since discussions relating to how to tax digital giants more fairly have been going on. The European Union along with the OECD nations have been working on a common approach to find tax collection solutions for tech companies such as Alphabet Inc, Amazon Inc, and Facebook Inc, especially after the national economic budgets have been hammered by coronavirus, creating a new sense of urgency.
The OECD and EU have been diligently working with approximately 137 countries on finding solutions relating to setting a fixed percentage of gross revenues that should be remitted by digital giants to the governments and administrative authorities. There have been no outcomes yet because of the ongoing clashes between the European Union and Trump administration over the issue that no other country except for the US is going to levy tax on the US tech giants.
Some European countries such as France, Italy, and Spain have already implemented their own digital taxes, despite a general agreement. France was the first country to levy a 3 per cent tax on the tech giants. But the decision of many other countries is on hold until the OECD talks conclude.
Despite the coronavirus pandemic-led economic destruction, the technology industry performed exceptionally well. The tech stocks grew incredibly in the last year or so, enabling them to capture a greater market share during the crisis. Amazon’s (NASDAQ:AMZN) shares have soared as high as US$ 3,380.00 (3 February) from US$ 2,004.20 (3 February 2020). On the other hand, Alphabet’s (NASDAQ:GOOGL) have been trading at US$ 1,919.12 currently (3 February), witnessing a rise of almost 30 per cent as compared to the same period last year.
The fact that these giants are doing well but can avoid or reduce their tax liabilities has been an area of concern for the governments all over the world. This has probably accelerated the process of global tax transformation.
