World G7 countries move closer to tax plan for US tech giants
Rich nations confident on reaching tech tax deal
German finance minister Olaf Scholz says a minimum tax deal would "change the world".The agreement is expected to include a global minimum rate of corporation tax.
G7 countries that make up lucrative markets for US tech giants have moved closer to a plan to squeeze more tax money from the coffers of Amazon, Apple, Facebook and Google.
The group, including Britain, Canada, France, Germany, Italy, Japan and the United States, has visions of a global tax rate of at least 15 percent on the multinational behemoths.
The move comes as US President Joe Biden is pressing to raise the corporate tax rate, taking particular aim at companies reaping fortunes.
Tax deal sets bar too low, campaigners say
G7 finance ministers have agreed to work together to create a "level playing field" on global taxation.G7 finance ministers meeting in London agreed to battle tax avoidance by making big companies pay more tax in the countries where they do business.
"Pressure has been building over the years," said Georgetown University law professor Lilian Faulhaber.
"I think some of it, honestly, is just political."
The pandemic's hit to economies has made it harder to balance government budgets, the professor noted. At the same time, voters see stories of internet firms raking in profits while avoiding taxes and, perhaps, taking advantage of market dominance.
"More and more voters have gotten upset about this," Faulhaber said.
Silicon Valley giants are increasingly under fire in Europe and the United States due to concerns about wielding monopoly-like power.
Why the G7 move on company tax is a good thing for Australia … but not in the way you might think
The G7 has agreed on a landmark company tax rate for international businesses, and Australia may reap some unexpected rewards.Finance ministers from the world’s richest seven nations, the G7, have agreed that businesses should pay a minimum company tax rate of “at least” 15% — and do so in each country in which they operate.
"Maybe the resentment bleeds from one side into the other in terms of tax avoidance and the influence these companies have over the way we live," said Alan Auerbach, a taxation specialist in the University of California, Berkeley, economics department.
- Outdated tax code -
Nations out to optimize tax revenue from tech firms face powerful companies adept at using data, analytics and ingenuity to build markets and profits.
In the United States, internet companies take advantage of opportunities for tax credits from investments or recruiting. Elsewhere, companies use legal strategies to shift profits to countries with low tax rates and move losses to places where taxes are steep.
"It's wrong to call them ethically or morally defective because they take advantage of the incentives that we provide them," Auerbach said.
Plan that would 'change the world': G7 nations 'close to historic deal to tax tech giants'
The world's leading economies are on the brink of announcing a historic deal to tax the tech giants, the German finance minister has told Sky News. © Reuters Finance ministers have tech giants in their sights Olaf Scholz said the plan to reform the taxation of tech companies and introduce a minimum level for business tax rates would "change the world", bringing in billions of pounds in tax revenue which would otherwise have been shifted to low tax countries.
"The international tax system is designed for an earlier era; when companies had a clear residence and their production occurred in one place," added Auerbach, co-author of recently released Taxing Profit in a Global Economy.
Using a 19th century tax code in a 21st century economy is a recipe for losing revenue, he reasoned.
Part of the G7 reform plan involves taxing multinational corporations where they make their money rather than where they have offices or factories.
"There are all these people who are both receiving services and providing eyeballs," Faulhaber said, referring to online audiences cashed in on by internet firms relying on digital advertising.
"Previously, their role has not been recognized in international tax law."
In Europe, such a tax code change would be felt in Ireland, which has attracted companies such as Apple with a favorable tax environment.
- Mere 'pinch' -
It remained unclear whether the G7 would achieve its goal.
Questions to be answered included whether countries could woo companies with deductions or breaks, and what portions of profits should be taxed.
Biden Boost As G7 Finance Ministers Reach Global Tax Agreement
The group of wealthy countries has reached a historic agreement on a minimum level of corporation tax.The Group of Seven (G7) consisting of the world's richest countries has reached a long-anticipated agreement on a corporate tax rate at a meeting of finance ministers in London on Saturday.
What would become of digital taxes already introduced in countries such as Britain, France, Italy and Spain?
Nuances of a global tax would have to be negotiated by those involved, with everyone figuring out how to apply the rules fairly.
Authorities will also need to craft a code that targets large tech firms while avoiding penalizing small or unrelated firms.
"In the end, it's a pinch; it's not going to be a back breaker," said Wedbush Securities analyst Dan Ives.
"Because ultimately global tax structures of big tech are some of the most complex in the world."
Seattle-based Amazon, for example, has been keen to distinguish itself from Silicon Valley firms by playing up its e-commerce core, complete with warehouses and a relatively lean profit margin of six percent.
The profile changes significantly once Amazon Web Services, its lucrative cloud computing division, is factored into the equation.
Saying Amazon is not a tech company is "like saying (Lionel) Messi doesn't play football," Ives quipped, referring to the Argentinian soccer star.
Michael Strahan, NFL Twitter pay tribute to Jim Fassel after former Giants coach dies at 71 .
Jim Fassel, who coached the Giants from 1997 to 2003, has died at 71. Plenty of tributes came in for the former coach, including a poignant one from Michael Strahan on "Good Morning America."As was confirmed by his son John Fassel to Sam Farmer of the Los Angeles Times, the elder Fassel suffered a heart attack while under sedation. He had been hospitalized and was dealing with chest pains.