Large multinational tech companies would have to pay taxes in the jurisdictions where profits are generated under new tax proposals from the Organisation for Economic Co-operation and Development (OECD).
The OECD says the shake-up would ‘bring the tax system into the 21st century’ and make tech giants pay more corporation tax where sales are made.
It hopes that the proposal will advance negotiations for an international corporate tax framework, based on the Inclusive Framework on base erosion and profit shifting (BEPS).
The proposals follow months of negotiations and would see companies pay tax in jurisdictions where they do business, even if they don’t have a physical presence there. The new rules outline both where taxes should be paid and what portion of profits should be taxed.
‘We’re making real progress to address the tax challenges arising from the digitalisation of the economy, and to continue advancing toward a consensus-based solution to overhaul the rules-based international tax system by 2020,’ said Angel Gurría, Secretary General of the OECD.
‘This plan brings together common elements of existing competing proposals, involving over 130 countries, with input from governments, business, civil society, academia and the general public. It brings us closer to our ultimate goal: ensuring all multinationals pay their fair share.’
Both France and the UK have already proposed levies on tech companies, but both have said that these would be scrapped in favour of an international tax.