Feeds

Hey, G20. Please knock it off with the whole tax loophole thing - we're good guys, really

Digital Economy Group asks OECD to leave tax laws alone

A tech lobbying group has written to the OECD to try and stop the G20's efforts to close loopholes that let international firms legally avoid some of their taxes.

The Digital Economy Group's letter was published by the think-tank along with other documents both for and against reforms to international tax laws, ahead of a progress update on a potential action plan for change due this Thursday.

The group, which represents leading US and non-US software, content, social media and ecommerce firms, said that it was unfair of authorities to be singling out tech companies for its tax ire.

"The internet is available to any enterprise that wishes to access it. Accordingly, no enterprise that secures a cost advantage by virtue of adopting internet-based efficiencies can exclude competitors from doing the same," it said.

The informal coalition also denied that digital firms acted any differently than other firms when it came to legal or tax matters. The DEG also said that VAT and other indirect taxes were the correct taxes to talk about when governments were focused on the point of consumption, not corporate taxes.

Tech firms have been singled out in a number of embarrassing tax scandals in Europe and the US, where details have emerged of legal tax accounting that allows firms to move profits out of countries with higher tax rates, despite the appearance of doing a lot of business there.

Last month, it appeared that Facebook had dodged a hefty corporation tax bill by paying €1.75bn in “admin costs” for its intellectual property to one of its companies in Ireland. Meanwhile, Google financials for 2012 showed it paid £11.2m in corporation tax in Britain, after only reporting a profit of £36.8m on turnover of £506m.

MPs from the Public Accounts Committee in Blighty have called this kind of tax arrangement "highly contrived" and labels the practice "aggressive tax avoidance".

On the other side of the pond, Apple has been accused by the US Senate's Permanent Subcommittee on Investigations of being a "tax resident of nowhere" after it emerged that the company had been operating practically tax-free in Ireland since 1980.

But the DEG said that using the internet was just a more efficient way of working and argued against different rules for the "digital economy".

"Enterprises that employ digital communications models operate in all sectors of the global economy," the group argued. "These enterprises constitute the digital economy. Accordingly, any options for addressing the digital economy should apply fairly and equally across all business lines.

"We believe that enterprises operating long-standing business models, subject to established international tax rules, should not become subject to altered rules on the basis that they have adopted more efficient means of operation." ®

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.