G20 finance ministers agree cross-border corporate tax shake-up


Companies such as Apple, Facebook, Google and Twitter will soon have to pay taxes regardless of their physical presence or measured profits in a country after G20 finance ministers agreed to accelerate a radical shake-up of cross-border corporate tax.

In a communiqué issued after their meeting in Fukuoka, Japan, finance ministers from the world’s largest economies said they aimed to agree on new rules “by 2020”. But there are still big differences to resolve, with the US, home to most of the world’s digital giants, opposed to rules that treat digital companies differently to others.

The proposals will lead to higher tax bills for some of the world’s most valuable companies and transform the basic tenets of international tax for a world where economic value comes from flows of ideas and data rather than physical goods.

“We have a new economic model based on digital activities and based on the sale and exchange and use of massive data,” said Bruno Le Maire, the French finance minister.

“For the time being there is no fair taxation of this new economic model.”

Digital companies provide their services across borders and can often choose to book sales in a low-tax jurisdiction. Countries may have no way to tax profits from internet advertising, for example, even if the adverts are bought by their citizens and shown to their citizens.

The UK and France are both bringing in digital services taxes based on the local sales of search engines and digital marketplaces. Because they target sales and not profits, however, there is a risk of double taxation.

“The US has significant concerns with the two current taxes that are being proposed by France and the UK,” said Steven Mnuchin, the US Treasury secretary.

He said the European taxes had “created an urgency for us to deal with this issue”. Mr Le Maire and Philip Hammond, the UK chancellor, both vowed to scrap their digital taxes as soon as there was an agreed G20 approach.

The G20 is looking at various ways to tax digital companies. One idea is to calculate the “non-routine” profits made by a digital company. Another approach is to use existing calculations of profits and then reallocate part of them to different countries. A third possibility is to specify a “baseline profit” for marketing and distribution in any given country.

The new system will also need a set of rules to decide when a digital company is actually involved in a national economy — for example, generating content from a community of users who live there — rather than simply selling a product across borders.

“Global tax rules should still aim to tax businesses based on where they create value, not just on where they make sales,” said Mr Hammond.

“We need to ensure the reformed international tax system continues to reward countries for creating attractive business environments.”

Despite disputes over the form and scope of the new tax rules, the G20 ministers signalled there was no alternative to a reform.

“It sounds like we have a strong consensus,” said Mr Mnuchin. “So now we need to just take the consensus . . . [and] turn this into an agreement.”


Rapid Mobile uses cookies, tokens, and other third party scripts to recognise visitors of our sites and services, remember your settings and privacy choices, and - depending on your settings and privacy choices - enable us and some key partners to collect information about you so that we can improve our services and deliver relevant ads.


By continuing to use our site or clicking Agree, you agree that Rapid Mobile and our key partners may collect data and use cookies for personalised ads and other purposes, as described more fully in our privacy policy.


You can change your settings at any time by clicking Manage Settings or by visiting our Privacy Centre for more detailed information.


Privacy Settings saved!
Cookie Services

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

These cookies are necessary for the website to function and enable essential services and functonality, including identify verification, service continuity and site security. Opt out is not availabe.

Essential Session management cookies for logged in users
  • wordpress_test_cookie
  • wordpress_logged_in_
  • wordpress_sec

For perfomance reasons we use Cloudflare as a CDN network. This saves a cookie "__cfduid" to apply security settings on a per-client basis. This cookie is strictly necessary for Cloudflare's security features and cannot be turned off.
  • __cfduid

Used by Spamshield to stop spam signups
  • _wpss_h_
  • _wpss_p_

NewsWire Service
  • BIGipServerwidget2_www_http

Decline all Services
Accept all Services