Planning Of Worldwide Tax Rates For Big Companies Set In Motion

The Organisation for Economic Co-operation and Development (OECD), an intergovernmental economic group made up of 36 countries, founded to stimulate economic progress and world trade is now eyeing tech giants as it addresses the rise of the digital economy and lessen the tension between the US and the European Union (EU) by planning worldwide tax rates for big-earning companies.

The proposal would also include makers of automobiles and luxury goods, among other products, that are found in Europe and other countries.

International negotiators have proposed rules for a new agreement so the likes of Amazon, Facebook and Google will pay more tax in countries where their products and services are availed of.

Though this move might ignite the fire between the US and other governments, OECD's move on the global tax rate of US tech giants is partly based on the US government's suggestions.

Christian Borggreen, European head of office at the Computer & Communications Industry Association, which represents a number of technology companies, is supportive of the proposal on the new rules on taxing.

These rules would give more taxing power to each country where consumers are and not where brands, licenses or patents are owned or where the business' headquarters is found.

This move of taxing big earning companies took time because decades ago, digital services have fewer ties to a local presence.

This enabled tech companies to have low taxes because they base it on licenses, patents, and trademarks.

These new rules would likely result in a little effect in the US and China's overall taxation since they are both hosts to big consumer markets.

Those expected to lose on the proposal are low-tax investment countries like Ireland and Switzerland which have small consumer markets.

Some large European countries may gain.

A spokesman for the U.K.'s Treasury department says that the OECD's proposals are good on which to move forward.

The spokesman also added that the department looks forward "to engaging with the details" to make sure concerns brought forth get effectively addressed.

Still, the OECD that guides 134 countries in the discussion of this tax reform, believes that those about to lose some tax revenue will still find this move acceptable because now, each country has its own way of responding to digitization.

A spokeswoman for Ireland's Treasury department confirmed that Ireland understands this is "in the interest of all countries" adding that the success of this move will ensure "the continuation of a stable and consensus-based international tax framework."

Amazon said it welcomed the proposal saying reaching a "broad international agreement" is "critical to limit the risk of distortive unilateral measures."

Apple and Facebook have no comment.

A Google spokesman reiterated a given statement supporting OECD.