Displaying items by tag: OECD
An international levy on digital conglomerates such as Google, Facebook, Microsoft and Amazon are expected to be imposed in 2020.
The admission was made by OECD Secretary-General Angel Gurria when speaking at the World Economic Forum in Davos. However, the implementation of the tax is highly complex, with many countries threatening to go it alone, whilst Europe remains divided on the issue.
Gurria said, “It is possible. I believe that the conditions exist to lay the foundations for an agreement this year that could be approved and enter into force in 2020.”
The prediction comes just a year after the tax scheme looked dead in the water as member countries failed to agree on a proposal that was tabled at G20. The Secretary General believes there is space for consensus and acknowledged that 2020 is a more likely timeline for the introduction of the digital tax.
Faced with the difficulties of reaching an agreement within the OECD and even the EU, countries such as Britain, France and Spain have already announced their intention to unilaterally tax the giants.
Surprisingly, some of the digital enterprises at the center of the tax welcome the new levy and said they support the initiative being pursued by the OECD.
During the World Economic Forum in Davos, Google vice-president Ruth Porat supported the negotiations overseen by the Paris-based OECD, which groups advanced economies.
Porat said, “We are very frank, we support the OECD initiative.
In France, Finance Minister Bruno Le Maire had initially defended, without much success, the adoption of a tax on digital giants at the European level. However, Ireland, Denmark and Sweden have blocked the plan by the EU, while in addition to this powerful Germany was lukewarm, fearing US retaliation against its car industry.
Australia is introducing a 10 percent goods and services tax (GST) for the streaming service Netflix which will come into effect from July 1. It’s the first time such a tax will be applied to digital products and services purchased in Australia from overseas companies.
Netflix confirmed to The New Daily in May that it would be adding the charge. A spokesperson said: “We collect and remit tax wherever we are legally obligated to do so.” The company hasn’t specified; however, whether its prices will by exactly 10 percent, or if it will absorb some of the cost by reducing subscription fees.
The streaming service had almost 2.3 million household subscriptions in Australia, according to an estimate by Roy Morgan Research in January. In February, Nielsen put the number higher at 2.8 million.
Australia had a loophole that meant companies did not have to collect GST on services and digital products exported into the country. The new law will close this gap, and also help companies like Stan, an Australia streaming service, compete with US giants like Netflix.
“It ensures Australian businesses selling digital products and services are not disadvantaged relative to overseas businesses that sell equivalent products in Australia,” said Treasurer Scott Morrison addressing Parliament when the bill was first introduced.
The new tax won’t push up the price of Netflix alone, because from July 1, the 10 percent GST will be extended to all products, including smartphone apps, song downloads, podcasts, e-books and games purchased by Australians from overseas. The tax will also apply to imported services, such as consultancy and professional services performed offshore.
Similar measures have been introduced in the European Union, New Zealand, Brazil, Russia, Taiwan and South Africa. In fact, the legislation Australia has introduced is in line with taxation guidelines set by the OECD, an economic think-tank for the world’s wealthiest nations. The new Australian tax could generate $350 million over four years from July 2017, which would be shared between the states and territories.
A similar tax was rejected by Canada recently. To protect the country’s struggling media industry, a 5 percent levy on high-speed internet services was proposed by a parliamentary committee. However, Prime Minister Justin Trudeau said: “We’re not going to be raising taxes on the middle class through an internet broadband tax. That is not an idea we are taking on.”