Matthias Cormann, Secretary-General of the Organisation for Economic Co-operation and Development (OECD) [Photo by Reuters Yonhap News]
[Asia Economy Reporter Park Byung-hee] The implementation of the digital tax, approved at the G20 summit held in Rome, Italy, last October, is expected to be postponed beyond the initially planned 2024.
According to major foreign media on the 24th (local time), Mathias Cormann, Secretary-General of the Organisation for Economic Co-operation and Development (OECD), said at the World Economic Forum (WEF, Davos Forum) that discussions on the implementation of the digital tax are facing difficulties, and the digital tax will be implemented at the earliest in 2024. The OECD has led discussions on the introduction of the digital tax and secured agreement among 137 countries worldwide and at the G20 summit last year.
Secretary-General Cormann said that discussions on specific details are not progressing as quickly as planned. He mentioned that there is currently a lack of consensus, and although the plan was to finalize the digital tax framework by mid-year, it seems likely to be postponed until the end of this year. He added that the schedule was initially set tightly to pressure governments, but he also expressed doubts about whether practical implementation will be possible starting in 2024.
Originally, the G20 leaders agreed to impose the digital tax starting in 2023.
However, in the United States, opposition Republican lawmakers are pushing back. Even within the European Union (EU), where unanimity is required, there are opposing views. The digital tax was scheduled to be discussed at the Eurozone Economic and Finance Ministers meeting that day, but Poland rejected it, and it was removed from the agenda altogether. Among EU officials, there is speculation that Poland is withholding support for the digital tax due to conflicts with the European Commission over EU funds. Poland applied to use EU funds, but the Commission has not approved it, leading to tensions between the two sides.
The digital tax framework is based on allocating taxing rights to countries where global companies actually provide services and generate profits, and introducing a global minimum tax rate of at least 15%.
Secretary-General Cormann said that among the two main pillars?allocation of taxing rights and the minimum tax?the minimum tax is more likely to be implemented first.
U.S. Treasury Secretary Janet Yellen is reportedly hoping for the minimum tax to be implemented before the midterm elections in November this year. Bruno Le Maire, France’s Minister of Economy and Finance, whose country holds the rotating presidency of the EU in the first half of this year, also said after the EU Economic and Finance Ministers meeting that he aims to reach an agreement on the implementation of the minimum tax at the EU Economic and Finance Ministers meeting on the 17th of next month.
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