PARIS (Reuters) – An OECD blueprint for an overhaul of the rules on taxing businesses operating across borders is too complex and needs to be simplified to be workable, multinationals asked for feedback on the plans said on Thursday.
The Organisation for Economic Cooperation and Development outlined last year the first major rewriting in a generation of international rules for taxing cross-border businesses, such as Google, Apple and Facebook.
With the aim to hammer out a deal by mid year among the nearly 140 countries involved, the Paris-based organisation has asked companies such as Netflix and Unilever for feedback on the technical blueprints’ two pillars.
The first pillar focuses on shifting more taxing rights to governments where the end customer is, to take account of the increasingly digital nature of cross-border business. The second focuses on a global minimum tax rate to discourage a race to the bottom among governments.
“We certainly do not oppose the introduction of new taxing rights, but we are very concerned about the fact that the blueprints for pillar one and pillar two as they are currently drafted remain overly complex,” Netflix head of tax Lisa Wadlin told an online conference providing feedback to the OECD.
Amazon tax director Simon Graddon said that though the internet group supported increasing tax rights for countries where customers are located, it was not so simple in practice because users’ location data was not always easily available.
Companies also called for simpler approaches for determining which companies would be covered by the new rules and how to calculate how much they would owe and where.
“Complexity really is the common enemy. It creates not only a compliance challenge for tax payers, but also for tax administrations,” Unilever executive vice president for global tax Janine Juggins said.
OECD head of tax Pascal Saint Amans acknowledged that the plans as they currently stood needed to be simplified and said his team would work on it in the coming weeks.
Big internet firms have pushed existing tax rules to the limit as they can book profit and park assets like trademarks and patents in low tax countries like Ireland wherever their customers are.
The drive for a global rule book has received new urgency as countries unilaterally adopt plans for a tax on digital companies over frustration with current rules.
(Reporting by Leigh Thomas, Editing by William Maclean)
