If implemented, this would put an end to multinational corporations shifting profits to low-tax heavens around the world…reports Asian Lite News.
The European Commission (EC) said that it will delay a corporate tax plan for the European Union (EU) in a bid to facilitate the broader global tax deal.
“We have decided to put on hold our work on our new digital levy,” the commission’s spokesman for taxation and customs, Daniel Ferrie told a daily briefing on Monday, adding that the bloc will re-assess the situation in autumn.
The G20 Finance Ministers on July 10 agreed to go ahead with the plan to design a global tax system that would impose a minimum levy on multinational companies, reports Xinhua news agency.
If implemented, this would put an end to multinational corporations shifting profits to low-tax heavens around the world.
“This was an extraordinary result after years and years of negotiations for which the EU Commission has worked tirelessly,” said Ferrie when asked to comment on the development.
“Successfully concluding this process will require a final effort by all parties and the Commission will focusing on this effort,” he added.
The idea to levy a digital tax by the EU had been floated in September 2020, when European Commission President Ursula von der Leyen announced the initiative in her State of the Union speech.
A month later, the European Commission published its work program for 2021 where it announced a legislative proposal on the digital levy.
UK Chancellor in-laws hit with 5.5m pound bill in Amazon India tax dispute: Report.
The emergence of case follows small traders claim they are being squeezed out of business by the multinational’s selling practices and that the US retailer’s 1 billion-pound-a-year venture with the chancellor’s father-in-law…reports Asian Lite News
A joint venture between UK Chancellor Rishi Sunak’s billionaire in-laws and the internet retailing giant Amazon is in a multimillion-pound dispute with the Indian tax authorities, a Guardian investigation has found.
The disclosure adds to the list of legal battles currently involving the joint venture, following news on Friday that India’s competition commission has been given permission to relaunch an investigation into Amazon.
The Guardian reported that small traders claim they are being squeezed out of business by the multinational’s selling practices and that the US retailer’s 1 billion-pound-a-year venture with the chancellor’s father-in-law, the technology entrepreneur NR Narayana Murthy, could be bypassing Indian foreign ownership rules.
N R Narayana Murthy(Wikipedia)
Amazon says it is operating in full compliance with local laws.
The emergence of the tax case follows last week’s G7 discussions, when the finance ministers of the world’s largest economies agreed a global deal designed to make tech companies pay more tax.
In India, foreign companies are banned from running an online retailer that holds inventory and then sells the goods directly to Indian consumers online. So, instead, the Amazon.in website is run as a “marketplace”, with Indian retailers selling their products via the site in return for a fee to the US giant, the report said.
One of the largest sellers on Amazon.in is a company called Cloudtail, a business indirectly 76 per cent — owned by an investment firm controlled by the Murthy family. The remaining quarter of Cloudtail is owned by Amazon.
An analysis of the company’s accounts and activities by the Guardian shows that Cloudtail: faces a 5.5 million pound demand — including “interest and penalties” — from India’s tax authorities has paid “meagre” taxes over the past four years, while using a business model described as Amazon “on steroids” has filled its top two posts — chief executive and finance director — with Amazon executives, while Cloudtail’s holding company, Prione, has also been run by former Amazon managers.
Cloudtail’s most recent accounts state: “The company has received a show cause notice in the current year from Directorate General of Goods and Service Tax Intelligence amounting to Rs 5,455 lakh (5.5 million pound) along with interest and penalties for service tax-related matters.”
It is not known precisely what the tax dispute is about. The company said it was contesting the bill, and added: “Since this matter is sub judice, we are unable to comment any further.”
Finance ministers meeting in London also endorsed proposals to make the world’s biggest companies — including US-based tech giants — pay taxes in countries where they have lots of sales but no physical headquarters, reports Asian Lite News
The Group of Seven wealthy democracies agreed Saturday to support a global minimum corporate tax rate of at least 15% in order to deter multinational companies from avoiding taxes by stashing profits in low-rate countries.
G-7 finance ministers meeting in London also endorsed proposals to make the world’s biggest companies — including US-based tech giants — pay taxes in countries where they have lots of sales but no physical headquarters.
Britain’s Treasury chief Rishi Sunak, the meeting’s host, said the deal would “reform the global tax system to make it fit for the global digital age and crucially to make sure that it’s fair, so that the right companies pay the right tax in the right places.”
US Treasury Secretary Janet Yellen, who attended the London meetings, said the agreement “provides tremendous momentum” towards reaching a global deal that “would end the race-to-the-bottom in corporate taxation, and ensure fairness for the middle class and working people in the U.S. and around the world.”
G7Finance Ministers & Central Bank Governors chaired by Chancellor @RishiSunak
agreed a landmark deal on global tax, and ways to build a strong, sustainable, balanced and inclusive global economic recovery.(TWTTER)
France cheered Saturday’s agreement and claimed credit for acting as its catalyst.
“We made it! After 4 years of battle, a historic accord was reached with G7 member states,” French Finance Minister Bruno Le Maire tweeted. “France can be proud!”
The meeting of finance ministers came ahead of an annual summit of G-7 leaders scheduled for June 11-13 in Cornwall, England. The Britain is hosting both sets of meetings because it holds the group’s rotating presidency.
The endorsement from the G-7 could help build momentum for a deal in wider talks among more than 140 countries being held in Paris as well as a Group of 20 finance ministers meeting in Venice in July.
The G-7 has also been facing pressure to provide vaccines for low-income countries facing new surges of Covid-19 infections and to finance projects to combat climate change. A statement Saturday from the two-day finance ministers’ meeting said only that they welcomed increased funding commitments by member countries and looked forward to more.
Prime Minister Boris Johnson chairs the Cabinet Meeting and uses a G7 mug. (Pic – Pippa Fowles No 10)
International discussions on the tax issue gained momentum after US President Joe Biden backed the idea of a global minimum of at least 15% on corporate profits.
The tax proposals endorsed Saturday have two main parts. The first part lets countries tax a share of the profits earned by companies that have no physical presence but have substantial sales, for instance through selling digital advertising.
The G-7 statement echoes a US proposal to simply let countries tax part of the earnings of the largest and most profitable companies — digital or not — if they are doing business within their borders. It also supported awarding countries the right to tax 20% or more of profit exceeding a 10% profit margin.
Part of the agreement is that countries such as France that have imposed digital services taxes would remove them in favour of the global agreement. The US considers those unilateral digital taxes to be unfair trade measures that single out big US tech companies such as Google, Amazon and Facebook.
The other main part of the proposal is for countries to tax their home companies’ overseas profits at a rate of at least 15%. That would deter the practice of using accounting schemes to shift profits to a few very low-tax countries.
Nations have been grappling with the question of how to deter companies from legally avoiding paying taxes by resorting to tax havens — typically small countries that entice companies with low or zero taxes, even though the firms do little actual business there.
The board has also extended the time limit for issuance of notice under section 148 of the Act for reopening the assessment where income has escaped assessment by three months…reports Asian Lite News
In view of the severe Covid-19 pandemic raging requests put forward by taxpayers, tax consultants and other stakeholders, the government has decided to provide further relief to taxpayers by extending various time limits of compliances.
Accordingly, the time limit for passing of any order for assessment or reassessment under the Income-tax Act, 1961 has been extended to June 30, 2021. This time limit was earlier extended to April 30, 2021 through various notifications issued under the Taxation and Other Laws (Relaxation) and Amendment of Certain Provisions Act, 2020.
Similarly, the Central Board of Direct Taxes (CBDT) has also extended the time limit for passing an order consequent to direction of DRP under sub-section (13) of section 144C of the Act for three months to June 30, 2021.
The board has also extended the time limit for issuance of notice under section 148 of the Act for reopening the assessment where income has escaped assessment by three months while the same extension has also been given for sending intimation of processing of Equalisation Levy under sub-section (1) of section 168 of the Finance Act 2016.
It has also been decided that time for payment of amount payable under the Direct Tax Vivad se Vishwas Act, 2020, without an additional amount, shall be further extended to June 30, 2021.
A finance ministry statement said that notifications to extend the above dates will be be issued in due course.
The hiking of the corporate tax rate to help pay for Biden’s plan was an idea that Republican leaders are panning as harmful to economic growth, it was reported…reports Asian Lite News.
Amazon founder and CEO Jeff Bezos has announced support for President Joe Biden’s focus on building up the country’s infrastructure and said the company also supports a corporate tax rate hike from 21% to 28%, according to media report.
The statement by Bezos was posted on the company’s website.
This came after Biden singled out the company for criticism about how much it pays in federal taxes when he recently unveiled his $2.3 trillion infrastructure proposal.
The hiking of the corporate tax rate to help pay for Biden’s plan was an idea that Republican leaders are panning as harmful to economic growth, it was reported.
The democrats will surely cite support from individual companies to undercut that argument.
“We recognize this investment will require concessions from all sides — both on the specifics of what’s included as well as how it gets paid for (we’re supportive of a rise in the corporate tax rate. We look forward to Congress and the Administration coming together to find the right, balanced solution that maintains or enhances U.S. competitiveness,” ),” Bezos was quoted in a news report.
US President Joe Biden
Meanwhile, Amazon has appointed Salesforce executive Adam Selipsky as new head of its Cloud computing arm Amazon Web Services (AWS).
Selipsky replaces long-time AWS executive Andy Jassy who will become Amazon CEO when founder Jeff Bezos steps down later this year.
“Selipsky brings strong judgment, customer obsession, team building, demand generation, and CEO experience to an already very strong AWS leadership team. And, having been in such a senior role at AWS for 11 years, he knows our culture and business well,” Jassy said in a statement late on Tuesday.
After spending 10 years at AWS, Selipsky ran the startup Tableau, which is now part of Salesforce which acquired it for $15.7 billion deal in 2019.
Jassy said that with a $51 billion revenue run rate that’s growing 28 per cent (on-year), it’s easy to forget that AWS is still in the very early stages of what’s possible.
“Less than 5 per cent of the global IT spend is in the cloud at this point. That’s going to substantially change in the coming years. We have a lot more to invent for customers, and we have a very strong leadership team and group of builders to go make it happen,” Jassy noted.
“We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom,” said Yellen..reports Asian Lite News
US Treasury Secretary Janet Yellen on Monday called for a global minimum tax rate on corporations that would provide a more level playing field for all countries.
“We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom,” Yellen said in prepared remarks for a virtual event hosted by the Chicago Council on Global Affairs, the Xinhua news agency reported.
“Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth, and prosperity,” she said.
Yellen’s remarks came after US President Joe Biden last week proposed a series of corporate tax changes that could raise roughly $2 trillion over 15 years to pay for infrastructure investments in 8 years.
US President Joe Biden
The Biden proposal would increase the US corporate income tax rate to 28 per cent, up from the current 21 per cent, attempting to partially reverse the tax cuts under the Donald Trump administration.
It would also raise the global minimum tax on US multinational corporations from 10.5 per cent to 21 per cent, in a bid to discourage offshoring and create incentives for investment in the US.
Yellen said that the Biden administration wants to end a “thirty-year race to the bottom” on corporate tax rates around the world.
“It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government,” she said.
Yellen also emphasized that global cooperation is needed to address global challenges such as the Covid-19 pandemic, technological change and climate change, as “no one country will be successful if it goes at it in isolation”.
“Over the last four years, we have seen firsthand what happens when America steps back from the global stage. America first must never mean America alone,” she said.
Yellen’s remarks also came as global financial and central bank officials begin to gather online this week for the spring meetings of the International Monetary Fund and the World Bank.
Yellen said that she would use the spring meetings to advance discussions on climate change, strengthen tools to improve vaccine access and financing for the world’s poorest countries, increase the focus on inequality and support a strong global economic recovery.
