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News INCOME TAX

  • Oct 13, 2020
  • Collapse of global tax talks could cost $100 bln, OECD says

    The global economy could shed more than 1% of output if international talks to rewrite cross-border tax rules break down and trigger a trade war, the OECD said on Monday, after countries agreed to keep up negotiating to mid-2021.

    Nearly 140 countries agreed on Friday to extend talks after the pandemic outbreak and U.S. hesitation before the presidential election squashed hopes of reaching a deal this year.

    Public pressure is growing on big, profitable multinationals to pay their share under international tax rules after the COVID-19 pandemic strained national budgets, the countries said in an agreed statement.

    The aim is to update international tax rules for the age of digital commerce, in particular to discourage big Internet companies like Google, Facebook and Amazon from booking profits in low-tax countries like Ireland regardless where their customers are.

    In the absence of a new international rulebook, a growing number of governments are planning their own digital services taxes, which has prompted threats of trade retaliation from the Trump administration.

    "In the 'worst-case' scenario, these disputes could reduce global GDP by more than 1%," the OECD, which has been steering the global tax talks, estimated in an impact assessment.