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

5 things you didn’t know about cloud backup

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." ®

The essential guide to IT transformation

More from The Register

next story
GCHQ protesters stick it to British spooks ... by drinking urine
Activists told NOT to snap pics of staff at the concrete doughnut
Britain's housing crisis: What are we going to do about it?
Rent control: Better than bombs at destroying housing
What do you mean, I have to POST a PHYSICAL CHEQUE to get my gun licence?
Stop bitching about firearms fees - we need computerisation
Top beak: UK privacy law may be reconsidered because of social media
Rise of Twitter etc creates 'enormous challenges'
Redmond resists order to hand over overseas email
Court wanted peek as related to US investigation
Ex US cybersecurity czar guilty in child sex abuse website case
Health and Human Services IT security chief headed online to share vile images
NZ Justice Minister scalped as hacker leaks emails
Grab your popcorn: Subterfuge and slur disrupts election run up
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Advanced data protection for your virtualized environments
Find a natural fit for optimizing protection for the often resource-constrained data protection process found in virtual environments.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.