Governments could slap multinational companies with precautionary levies if they refuse to respect a future global tax rate.
The Organisation for Economic Co-operation and Development today proposed a withholding tax as a means to encourage firms to apply a minimum rate, which remains to be decided. It outlined the plan in a consultation document calling for comments from the public until December 2.
The minimum rate is part of a global drive to ensure companies pay their fair share in dues and stop them from shifting profits to countries with low or no corporate tax.
Countries including France have repeatedly criticized tech companies such as Facebook and Google for dodging its taxes.
“A minimum tax rate on all income reduces the incentive for taxpayers to engage in profit shifting and establishes a floor for tax competition among jurisdictions,” the OECD said in a statement. “These rules would be implemented by way of changes to domestic law and tax treaties.”
The OECD plans to publish the final design at the end of next year, together with a blueprint on where to tax companies’ digital activity across the world.
The Paris body proposed no rate today. But it did say a “fixed percentage tax rate is the simplest option from a design perspective.”
The organization of rich and developed countries said it is still working on the scope of a minimum tax, too. It said it likely would use thresholds based on revenue or profit to determine which companies should be subject to the plan, rather than issuing waivers based on size, industry or other characteristics
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