OECD Releases Proposals on Taxation

MEDIA ROOM

OECD published proposals how to make international digital business to pay corporate taxes in jurisdictions where the sales take place. Current legislation makes possible for internet companies legally avoid taxation by using corporate structures for shifting profits to low-tax jurisdictions.

Improving taxation of internet multinationals

In the released draft paper some measures are proposed to improve taxation of internet multinationals:

  • new taxation criteria based on ‘significant digital presence’, and a new concept of ‘virtual’ rather than purely physical permanent establishment;
  • changes to model tax agreements that exempt business premises from permanent establishment status if they merely store, display or deliver goods, or collect information for the enterprise;
  • introduction of withholding taxes for digital transactions.

The final report on this issue is expected in September 2014.