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Coronavirus must not stymie global tax reform, German minister says

By
Reuters API
Published
Apr 9, 2020

Efforts to introduce global rules on taxing digital giants like Google , Amazon and Facebook should not be derailed by the coronavirus crisis, German Finance Minister Olaf Scholz said.




The Organisation for Economic Cooperation and Development (OECD) is developing rules to make digital companies pay tax where they do business, rather than where they register subsidiaries.

This could boost national tax revenues by a total of $100 billion a year, the OECD estimates.
But the coronavirus crisis and forecasts of a deep recession in many industralized nations have cast doubt on the OECD's goal of reaching a deal among more than 130 nations this year.

Scholz, speaking at a political conference in Berlin, said the pandemic had underlined the urgency to improve international cooperation and boost the capability of the public sector.
"We must work to ensure fiscal firepower and robust national budgets, in all countries. We must not allow some to avoid contributing their fair share," Scholz said on Thursday.

"We must put an end to the harmful race to the bottom on corporate tax rates," the minister said, adding that only small countries could hope to gain something by undercutting the tax rates of neighbouring countries.

Scholz said countries should adopt a new global corporate taxation framework that was fit for the globalised economy and that made profit shifting to tax havens a thing of the past.

The OECD wants to set a minimum effective level at which companies would be taxed and is seeking agreement by the start of July, with an endorsement by the G20 by the end of the year.

"An agreement will prevent an escalation of trade conflicts that unilateral steps would cause," Scholz said, in a reference to French plans to push ahead with a national digital tax if no broader deal should be reached by the end of this year.

"And an agreement will support the long-term economic recovery across the globe after corona," Scholz added.

"We have to be successful."

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