TAX: REWRITING THE RULES
T
he digitalization of the international economy has generated opportunities for companies to sell goods and services to anyone, anywhere. Change is afoot as current tax laws may not capture all relevant revenues, and digital services companies need guidance to ensure they remain compliant. A corporate minimum tax seems all but certain. The investment landscape is complicated, mainly due to various rates, rules and regulations across countries, and multinational companies have long since used creative
ways to decrease their tax bill. While the corporate tax rate varies significantly around the world now, implementation of a universal tax would impose a fixed rate of 15%, requiring companies to pay at least that wherever they operate, not just where they are headquartered. Every day, 650 million online searches are carried out in the EU, demonstrating how much the internet has changed our lives. Yet, global corporate tax rules are more than a century old and are out of step with the boom in the digital economy. Both the way a business sells
to a customer and the way customers buy has shifted and a revamp of taxes is long overdue. Countries have begun instilling unilateral digital services taxes—another country-specific move that complicates an already intricate landscape. With all the global uncertainty that Europe is facing with the COVID-19 pandemic and Brexit, there was a danger that the Organisation for Economic Co-operation and Development (OECD) global tax reforms – the other main risk to European business and economy – would be forced further down the corporate agenda. europeanbusinessmagazine.com 31
