G20 powers put pressure on taxing digital giants

G20 powers put pressure on taxing digital giants

Germany and france have urged the leading industrialized and emerging countries to introduce a worldwide minimum corporate tax as soon as possible.

"We have to hurry up," france's finance minister bruno le maire said at the meeting of the g20 countries in fukuoka, japan, on saturday. There must be results before the end of this year.

"We know there is a threat of tax-cutting competition worldwide," said german finance minister olaf scholz. "Many large companies do not pay the taxes they should, especially in the digital economy." basic agreement came, among others, from the USA and china.

Multinational digital giants like google and facebook are estimated to pay less than half as much in taxes as traditional industrial companies. They are usually based in only one country, but generate substantial revenues from their users all over the world. In addition, they can easily move their business activities to tax havens.

"Consensus is building that we need new rules," said china's finance minister liu kun. Joint coordination is crucial, he says, also to avoid double taxation. "A fragmented approach is not good for any of us," said u.S. Treasury secretary steven mnuchin.

At the same time, however, mnuchin criticized france and the uk, which had jumped the gun with national digital taxes to fuel the international debate. The USA had considerable concerns about this. But it's good that the pressure to act has increased as a result.

The u.S. Had previously passed its own tax reform, which also includes minimum tax rates. EU member states tried to pass their own digital tax, especially last year, but failed due to resistance from ireland, among others, which feared for europe's global competitiveness.

In addition to the minimum tax, the redistribution of state taxation rights is also being discussed in the G20 and the organization for economic cooperation and development (OECD).

Emerging economies like indonesia and india in particular are now calling for the location of business activities to become much more important in all industries, not just digital companies. Today's tax system dates back to the last century and is primarily based on where companies have their headquarters or physical presence. There should be a complete solution to all issues by 2020.

Minimum taxation rules will generate additional revenue, also for germany, scholz said more. The amount is still unclear. He also stressed that germany's interests as an exporting nation had to be safeguarded in the question of taxation rights as well. "If new rules are found for taxing the digital economy – and we can now safely assume that they will be – we will also ensure that they are not ones that threaten the taxes we collect today."

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