Taxes

G20 To Close Tax Loopholes For Big Tech By Next Year

The Group of 20 finance ministers said over the weekend that they will come up with common rules to prevent tech companies from using tactics to lower taxes.

Reuters, citing a communique issued by the Group of 20 finance ministers, reported that the moves are aimed at having big tech companies including Facebook, Google and Amazon pay more taxes after facing criticism they reduce the taxes owed by showing profits in low-tax countries regardless of where the customer is located.

“We welcome the recent progress on addressing the tax challenges arising from digitization and endorse the ambitious program that consists of a two-pillar approach,” the G20 communique said, according to Reuters. “We will redouble our efforts for a consensus-based solution with a final report by 2020.”

The new rules, reported Reuters, would mean the tech companies have to pay more taxes — and they would also make it harder for countries with low tax rates such as Ireland to lure foreign investments by promising low corporate taxes. Reuters noted that the U.K. and France have been big supporters by making it harder for tech companies to move profits to low-tax countries. The U.S., however, has expressed concerns about internet companies in the U.S. having to pay more taxes overseas.

“At the moment we have two pillars, and I feel we need both pillars at the same time for this to work,” Japanese Finance Minister Taro Aso, who chaired the G20 meetings, told reporters, according to Reuters. “The proposals are still a little vague, but they are gradually taking shape.”

The Group of 20 finance ministers communique is just the latest effort to go after some of the world’s largest tech companies. Google, Facebook, and other tech titans are facing increased scrutiny in the U.S. and overseas. The European Union has fined Google billions of dollars, and expectations are growing that it could be the subject of an inquiry in the U.S.

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