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Collapse of global tax talks could cost $100 bln, OECD says

The global economy could shed more than 1% of output if international talks to rewrite cross-border tax rules break down and trigger a trade war, the OECD said on Monday, after countries agreed to keep up negotiating to mid-2021. Nearly 140 countries agreed on Friday to extend talks after the pandemic outbreak and U.S. hesitation before the presidential election squashed hopes of reaching a deal this year. Public pressure is growing on big, profitable multinationals to pay their share under international tax rules after the COVID-19 pandemic strained national budgets, the countries said in an agreed statement.

The aim is to update international tax rules for the age of digital commerce, in particular to discourage big Internet companies like Google, Facebook and Amazon from booking profits in low-tax countries like Ireland regardless where their customers are. In the absence of a new international rulebook, a growing number of governments are planning their own digital services taxes.

News source ~ Economic Times