May 4, 2020 / 3:38 PM / a month ago

Coronavirus slows global tax talks, but year-end target in focus - OECD

PARIS (Reuters) - The coronavirus outbreak has slowed progress in talks to rewrite international tax rules, although a year-end deadline is still in reach, the Organisation for Economic Cooperation and Development said on Monday.

Representatives from nearly 140 countries were due to meet in Berlin in early July to give political backing to the first rewriting of international tax rules in more than a generation.

OECD head of tax policy Pascal Saint-Amans said that the aim now was to hold a meeting either physically or virtually in early October and that the whole package might not be ready by then.

Countries are negotiating new international tax rules to make multinational companies, and especially big tech firms, pay tax where they do business, rather than where they register subsidiaries.

Organised by the OECD, the talks have two focuses with one on how to tax multinationals across borders and the other an agreed global minimum tax rate limiting how low countries could go when taxing companies.

Saint-Amans said that discussions on the minimum tax rate were moving faster and that the rest might take until next year to hammer out.

“Shall we be able to deliver the full-fledged package in October? I think we need to be reasonable and the reasonable expectation is that we may have a staged process,” he said in an online update on the OECD’s tax work.

On the issue of where multinationals should be taxed, he said there was “an emerging view” that it should focus on digital companies, although that goes against a U.S. demand for a broader scope to cover big consumer-facing companies.

In the absence of a deal at the OECD, a growing number of countries are moving ahead with plans to roll out their own national taxes on digital companies, despite U.S. threats to retaliate with tariffs.

With the coronavirus fallout squeezing government budgets worldwide, Saint-Amans said that countries wanted more than ever to push for a global deal, although some U.S. business lobbies have called for a standstill.

French Finance Minister Bruno Le Maire said on Monday that a digital services tax was more relevant than ever since big tech companies were getting through the crisis better than more traditional companies and were also being taxed less.

Reporting by Leigh Thomas; Editing by Hugh Lawson

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