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I.T. is IT!

Kitty Miv, Editor
14 January, 2021

Well here we are, several years into the first month 2021, and it seems that in the analogue world, forward momentum on some significant tax measures has been hamstrung this week by political convulsions, the global pandemic, a backlog from the recent 'festive' period, or in some cases, all three.

However, such restrictions have a much lesser impact online, and it is to matters digital (both in terms of taxation and administration) that we once again turn, starting with Russia, which recently launched a new low-tax regime for Information Technology firms, featuring a three percent corporate tax rate, down from 20 percent, and a reduction in social security tax contributions for employers to 7.6 percent, down from 14 percent.

In Taiwan, meanwhile, the focus was on compliance, with the Ministry of Finance reminding internet retailers of their tax obligations in relation to online transactions. Highlighting that online retailers must include business tax in their prices and collect and remit the tax, the Ministry clarified that: "Regardless of shopping in brick-and-mortar or online stores, the list price shall be inclusive of the business tax. Recently, members of the public have reflected to the [National Taxation] Bureau that some customers were required to pay additional five percent business tax when asking online stores for uniform invoices."

In the United States, the US Trade Representative released the conclusions of an investigation undertaken last year into digital services taxes adopted by India, Italy, and Turkey, finding that they unfairly burden or restrict US commerce. However, the USTR delayed a decision on potential retaliatory tariffs, pending the outcome of other reviews, and put on hold tariffs that were due to be introduced on French goods.

Finally for this week, fittingly (and prudently in view of rising COVID-19 infection rates in various parts of the world), the OECD revealed that it would be streaming the two-day 11th meeting of the BEPS Inclusive Framework, to be held on January 27-28, 2021.

The OECD explained that opening the event to the public online will allow stakeholders a glimpse into the various international tax-related workstreams undertaken by the Inclusive Framework to date.

One of the key issues that will be under discussion by participants are the tax challenges arising from digitalization and the future of international taxation, including 2021 priorities of the G20.

In October 2020, the OECD released its proposals for reform of international tax rules. Under pillar one of its proposals, new rules will be established on where tax should be paid ("nexus" rules) and there will be a fundamentally new way of sharing taxing rights between countries. The second pillar would introduce a global minimum tax, which the OECD considers would help countries around the world to address remaining issues linked to base erosion and profit shifting by MNEs. As part of the ongoing work in this area, the OECD/G20 Inclusive Framework on BEPS invited public comments on the Reports on the Pillar One and Pillar Two Blueprints, and over 3,500 pages of comments were reportedly received, from over 200 contributors.

Until next week!


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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