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International Community Agrees on a Road Map for Deal on Taxing Multinational Firms

Companies like Google, Facebook and Amazon are able to cut tax bills by booking profits in low-tax countries

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"Important progress has been made through the adoption of this new Programme of Work. Pixabay

A total of 129 countries and territories have adopted a “Programme of Work” laying out a process for reaching a new global agreement for taxing multinational enterprises, the Organisation for Economic Co-operation and Development (OECD) said on Friday.

The roadmap aims to resolve the tax challenges arising from digitalisation of the economy.

The Programme of Work will explore the technical issues to be resolved through two main pillars.

The first pillar will explore potential solutions for determining where tax should be paid and on what basis (“nexus”), as well as what portion of profits could or should be taxed in the jurisdictions where clients or users are located (“profit allocation”).

International Community, Roadmap
The roadmap aims to resolve the tax challenges arising from digitalisation of the economy. Pixabay

The second pillar will explore the design of a system to ensure that multinational enterprises – in the digital economy and beyond – pay a minimum level of tax.

This pillar would provide countries with a new tool to protect their tax base from profit shifting to low/no-tax jurisdictions, and is intended to address the remaining issues identified by the OECD/G20 Framework on Base Erosion and Profit Shifting (BEPS) initiative.

According to a report in RTE.ie, companies like Google, Facebook and Amazon are able to cut tax bills by booking profits in low-tax countries no matter where the end customer is.

In 2015 the OECD estimated revenue losses from BEPS of up to $240 billion, equivalent to 10 per cent of global corporate tax revenues.

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OECD created the “Inclusive Forum” to co-ordinate international measures to fight BEPS and improve the international tax rules.

“Important progress has been made through the adoption of this new Programme of Work, but there is still a tremendous amount of work to do as we seek to reach, by the end of 2020, a unified long-term solution to the tax challenges posed by digitalisation of the economy,” OECD Secretary-General Angel Gurria said in a statement.

“Today’s broad agreement on the technical roadmap must be followed by a strong political support toward a solution that maintains, reinforces and improves the international tax system. The health of all our economies depends on it,” Gurria added.

The document, which calls for intensifying international discussions around two main pillars, was released on Friday, but it will be presented by the OECD Secretary-General to G20 Finance Ministers for endorsement during their June 8-9 ministerial meeting in Fukuoka, Japan. (IANS)

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Tech Giant Apple Inks Deal with UK-based Chipmaker

Imagination recently announced "IMG A-Series GPU" which claims to be the fastest GPU to date

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Apple, smartphone
Customers walk past an Apple logo inside of an Apple store at Grand Central Station in New York, Aug. 1, 2018. VOA

UK-based chipmaker Imagination Technologies on Thursday announced that Apple has signed a multi-year agreement with the company. Both the companies were earlier in a dispute over GPU designs that Apple licenses from Imagination for its iOS devices.

“Imagination Technologies (‘Imagination’) announces that it has replaced the multi-year, multi-use license agreement with Apple, first announced on February 6, 2014, with a new multi-year license agreement,” the British chip-maker said in a statement.

Apple will have access to a wider range of Imagination’s intellectual property in exchange for license fees, it added. In April 2017, Imagination announced that Apple planned to stop using the firm’s IP in its hardware designs by 2019. It was reliant on licensing revenue from Apple which was nearly $81 million in fiscal 2017, reports AppleInsider.

apple, software, updates, iOS
An Apple company logo is seen behind tree branches outside an Apple store in Beijing, Dec. 14, 2018. VOA

Imagination then entered a “dispute resolution process”, accusing Apple of “unauthorised use of Imagination’s confidential information and Imagination’s intellectual property rights.”

During their dispute days, the Cupertino-based iPhone maker was even charged with allegedly poaching Imagination employees.

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Apple said it stopped accepting new IP from Imagination in 2015. The embattled Imagination even found a buyer in China-backed equity firm Canyon Bridge. Apple used Imagination’s PowerVR technology in its A-series system-on-chip designs found in certain iPads, Apple Watch Series 3 and Apple TV 4K. Subsequent A-series designs rely solely on Apple’s in-house technology.

Imagination recently announced “IMG A-Series GPU” which claims to be the fastest GPU to date. (IANS)