06/03/2021

OECD Expects Global Tax Deal in October

The deal may need legislative approval before an agreement is final

Despite growing expectations in Europe, the outgoing head of the Organization for Economic Cooperation and Development (OECD) said Monday that a global deal to make multinational corporations pay more in the countries where they operate might not come until October.

The OECD has been trying to reach agreement among nearly 140 countries on a global tax overhaul to address how “consumer-facing” digital giants like Apple, Facebook, Google and Twitter are taxed in countries where they have users. The OECD’s work has taken on some urgency as some countries have grown impatient and proposed their own digital tax plans while hoping for an international consensus.

Speaking in Paris, OECD chief Angel Gurria said a “180-degree change in the position of the U.S.” has accelerated the timetable for a deal but some countries, including the U.S., may need legislative approval before an agreement is final.

Last month, the Biden administration pitched a compromise to counterparts around the world that would apply new global tax rules to no more than 100 large multinational corporations with at least $20 billion in annual revenue. The U.S. plan would consider a company’s profitability in determining whether more of its income could be taxed by the countries where it does business. The U.S. plan is regarded as progress by G-7 finance ministers meeting this week in London. G-7 countries include Canada, France, Germany, Italy, Japan, U.K. and the U.S.

Gurria tempered expectations and said a meeting of G-20 finance ministers over the summer might shed more light on the timetable for an agreement.

“The final package could be taken to October when there is another meeting of G-20 finance ministers and central bank governors, but all in time for the summit to give its blessing to the final deal and then to go into implementation mode,” Gurria said. “We have a deal in sight and hopefully it will happen this year.”

This article was provided to OSAE by ASAE's Power of A and Inroads.