DIGITAL

Digital services. On January 31, the 137 signatories of the Inclusive Framework on BEPS (Base Erosion and Profit Shifting), signed an agreement at an OECD meeting in Paris to negotiate new guidelines on taxation of large digital companies and to address the Tax Challenges Arising from the Digitalization of the Economy.” The idea is to agree on a way of taxing these new entities to ensure an “even” playing field among the world’s economies. The goal is to reach a full pact by the end of 2020.

The agreement covers automated digital services, including social networking, search engines, games or online advertising; and consumer-oriented activity, which covers all sales of products for personal use. 

Participants agreed to continue the negotiation of new tax rules on the basis of a “unified approach”, so as to establish a common framework on where, or in relation to what, these companies should be taxed and how much. The objective is for these companies to contribute to the economies where they provide their services and for this taxation to allow for a profitable business scheme.

Next steps

Based on the discussions among the 137 countries of the Inclusive Framework on BEPS and the companies involved, a new Fiscal Report is expected to emerge, headed up by the OECD Secretary General in the coming months. This will be assessed prior to serving as a basis for possible agreements to be reached before July 2020, according to the OECD.