Logo of Phnom Penh Post newspaper Phnom Penh Post - A fair digital taxation system



A fair digital taxation system

Content image - Phnom Penh Post
US tech giants such as Google and Amazon are facing growing criticism globally for evading taxes. afp

A fair digital taxation system

Negotiations over digital taxes that require information technology giants to shoulder an appropriate tax burden have stalled. Countries should work together to create fair rules that are in line with the changing times.

US tech giants such as Google and Amazon operate beyond national borders, offering services such as e-commerce, search and video streaming.

Under the current taxation system, if companies do not have factories, offices or other bases in a country’s jurisdiction, the country cannot levy corporate taxes, in principle. Even if goods and services are provided to Japanese consumers online, it can be difficult for the Japanese government to collect appropriate taxes.

US tech giants are facing growing criticism globally for evading taxes through such means as transferring intellectual property rights to countries with low corporate tax rates.

E-commerce and search engines are important infrastructure in everyday life. Tech giants that earn huge profits should be required to pay taxes commensurate with this situation.

It is worrisome that conflict is growing among countries over the establishment of international rules.

Financial ministers and central bank governors of the Group of 20 major economies discussed digital taxation earlier this month, but no progress has been made. It appears it will be difficult for them to meet the goal of reaching a final agreement by the end of this year.

The Organisation for Economic Cooperation and Development, which is coordinating discussions on this issue with the G20, announced in January that countries concerned had reached a broad agreement on introducing a system that would enable them to impose taxes on companies according to their sales, even if they do not have bases in these countries.

However, the administration of US President Donald Trump, which wants to protect companies in its own country, reportedly made a proposal that would allow companies to decide for themselves whether to follow the envisioned system.

In June, the administration suggested a pause in the discussions. It claimed that this was so priority could be given to efforts to deal with the Covid-19 pandemic, but was likely meant to put pressure on Britain, France and other European countries that are considering their own taxation plans. The Trump administration’s disregard for rule-making is unacceptable.

There is also strong dissatisfaction with tax evasion by tech giants in the US. A fair taxation system would surely benefit the US as well.

It is not surprising that Europe and other countries oppose the US proposal for allowing companies to choose whether to follow the envisioned digital taxation system, claiming that such a stance would water it down. In addition to European countries, Brazil and other emerging economies have made moves for their own digital taxes.

The US is hinting at imposing punitive tariffs on these countries. If economic friction develops, it could deal a further blow to the world economy, which is already suffering from the pandemic. European and emerging economies are also urged to focus on international cooperation rather than taxation systems that put their own interests first.

Should the international talks fall apart, Japan would also lose tax revenue that would be generated under the envisioned system. The government must make every effort to move the discussions forward.

Editorial/THE YOMIURI SHIMBUN (JAPAN)/ASIA NEWS NETWORK

MOST VIEWED

  • Hun Sen: Full country reopening to be decided in two weeks

    Prime Minister Hun Sen has announced that if the Covid-19 situation remains stable for 15 consecutive days from the end of the October 5-7 Pchum Ben public holiday, Cambodia will reopen fully, albeit in the context of Covid-19 whereby people have to adjust their lives to

  • Cambodia sets new Covid-19 quarantine rules

    The government has modified Covid-19 quarantine requirements, shortening the duration for, among others, Cambodian officials, foreign diplomats and delegations, investors and inbound travellers in general. According to an official notice signed by Minister of Health Mam Bun Heng late on October 16, quarantine length for Cambodian

  • Will Evergrande change the way Chinese developers do business in Cambodia?

    China’s property sector policy has exposed the grim financial condition of real estate developers including those operating in Cambodia, which raises questions over the viability of their projects and business going forward The dark blue netting draping over one of Yuetai Group Co Ltd’

  • Phnom Penh governor: Show Covid-19 vaccination cards, or else

    Phnom Penh municipal governor Khuong Sreng late on October 5 issued a directive requiring all people aged 18 and over and the parents of children aged 6-17 to produce Covid-19 vaccination cards when entering schools, markets, malls, marts, eateries and other business establishments that have been permitted

  • Cambodia seeks probe into 'false reports' on Hun Sen's alleged Cypriot passport

    Minister of Justice Koeut Rith on September 6 wrote a letter to his Cypriot counterpart Stephie Dracos requesting cooperation in investigating and providing the truth in relation to the "exaggerative and false allegations" that Prime Minister Hun Sen holds a Cypriot passport. In his letter, the

  • 'Pandora Papers' expose leaders' offshore millions

    More than a dozen heads of state and government, from Jordan to Azerbaijan, Kenya and the Czech Republic, have used offshore tax havens to hide assets worth hundreds of millions of dollars, according to a far-reaching new investigation by the International Consortium of Investigative Journalists (