G7 ministers agree on 'two-pillar' taxation plan for tech giants

Topics G7

Technology
G7 finance ministers meeting in France on Thursday agreed a plan for taxing digital companies such as Facebook and Google that will set a minimum level of taxation for them.

 
Ministers "fully supported a two-pillar solution to be adopted by 2020", said a statement from France which holds the rotating chairmanship of the group of world's most developed countries.

 
"New rules should be developed to address new business models... allowing companies to do business in a territory without any physical presence," it said.

 
"Ministers agreed that a minimum level of effective taxation... would contribute to ensuring that companies pay their fair share of tax," the statement said.

 
A French official, who asked not to be named, said the tax level would have to be agreed in the future.

 
"The tax level to be set would depend on concrete design features of the rules," the statement said.

 
"The G7 looks forward to further progress in the context of the G20 and a global agreement on the outlines of the architecture by January 2020," it added.

 
The consensus reached at the G7 -- which sources said came after talks that lasted into the early hours of Thursday morning -- came after a bitter dispute between France and the United States in the last weeks.

 
The French parliament earlier this month passed a new law that will tax digital giants on revenue accrued inside the country, even if their European headquarters are elsewhere, in a move that will affect huge US groups Google, Apple, Facebook and Amazon.

 
The move infuriated President Donald Trump and the US announced an unprecedented probe against France which could trigger the imposition of tariffs.

 
The plan agreed Thursday would have to be further developed by the G20 group of top 20 economies and then implemented under the aegis of the Organisation for Economic Cooperation and Development (OECD).

 
Meanwhile, the G7 ministers agreed that new cryptocurrencies such as Facebook's Libra risked destabilising the international monetary system and were not ready to be implemented.



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel