A global economic watchdog on Monday said talks on how to overhaul taxes on big tech companies will stretch into 2021 after the coronavirus pandemic and “political issues” prevented the group from wrapping up by its end of the year deadline.
The Organization for Economic Cooperation and Development (OECD) on Tuesday announced a two-pillar proposal to overhaul how big tech companies are taxed. The proposal was approved by a group with participants from 137 countries and jurisdictions.
The proposal’s first pillar includes a blueprint to establish rules on where taxes should be paid and a way of sharing taxing rights between countries. The second pillar proposes establishing a global minimum tax for tech companies.
The plan will be presented to Group of 20 finance ministers next week with the goal of putting the plan in place by the middle of next year if an agreement is reached, said Angel Gurria, the OECD’s secretary-general.
Gurria, during a press conference from Paris, cited difficulties that arose from the coronavirus pandemic, including restrictions on in-person meetings, as well as “political issues” for the delay in the plan which OECD had previously said would be done before the end of 2020.
The Trump administration reportedly pulled out of negotiations in June and threatened to impose tariffs on imports from countries that impose the taxes.
On Monday, however, Gurria said that “every single country” is participating in the effort, with “no exceptions.”
He warned that if a proposal is not agreed on by countries it could lead to a trade war, which he said would cause issues for countries, especially amid ongoing economic recovery efforts due to the coronavirus pandemic.
“The alternative to finding an agreement would be a trade war,” he said. “Now, a trade war is always bad, a trade war is always going to set us back, but now in the time when we are planning for the recovery of COVID-19 it would inflict a very, very serious setback.”