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G20 Countries Agree to Comply Common Rules for Taxing Technology Giants

  • On Saturday, group of finance ministers from 20 countries agreed in a draft communiqué to compile common rules for closing loopholes that are used by technology giants (such as Google, Facebook, Amazon, and many other large tech firms) for reducing their corporate taxes. Reports say that most of these technology companies cut their aggregate tax bills by booking profits in low-tax countries irrespective of the end customer’s location. Many countries consider this practice as unfair. Once these new rules come into effect, the technology MNCs will have to pay higher taxes. This also means that countries with ultra-low corporate tax rates such as Ireland and Luxembourg will find it difficult to attract foreign direct investments. The draft communiqué says that a final report including a consensus-based solution will be reached by 2020. The main proponents of this global taxation program are France and Britain.