Finance ministers referring to the Group of 20 have been considering a proposal on Friday to tax tech giants like Amazon and Apple to formulate a unified strategy in a modern digitalized global economy.
G20 leaders, as well as central bankers, gave the green light to the new guidelines based on a framework released on Friday by the Organisation for Economic Co-operation and Development this month while meeting in Washington, as reported by The Financial Times.
Under that proposal, companies could be required to pay extra for corporate taxes to countries where they sell products even when they don’t physically operate there. Tax rates, however, have yet to be determined.
Only companies with an annual income of $825 million or extra can be affected.
The OECD is making public remarks on the proposal by Nov. 12. The objective is to have a rule in place next year.
Part of the drive for the new guidelines is to prevent large tech companies, like Apple and Amazon, from dodging tax obligations by routing profits by tax havens where they’ve little presence.
While tech companies could be the most well-known objective, the tax would apply to multinationals from different sectors, too.
Individual countries are forging forward with their taxes on tech companies. The international rules would restrict a patchwork of various tax laws from countries throughout the globe.
France, for example, approved a digital tax, to the dismay of the White House. President Trump threatened to impose tariffs in retaliation. The two sides have since resolved the dispute.
Trump additionally threatened to retaliate against Italy after Reuters reported it’s preparing a digital tax.