OECD Tax Deal Calls for Eliminating Digital Services Taxes

A pile of money
(Image credit: Chris Clor via Getty Images)

There is general agreement worldwide that taxes on digital services — taxes on multinational firms based on their digital business in a particular country or area — are a bad idea.

The European Union had been planning a digital tax but held off until this month given the ongoing Organization for Economic Cooperation and Development (OECD) tax reform talks that resulted in Friday’s announcement.

Also Read: Potential EU Digital Tax Has Trump Administration, Tech Companies on Edge

The centerpiece of that historic digital age tax agreement was a minimum corporate tax rate of 15% on all multinational companies with revenues above 750 million euros (about $868 million), which the OECD said translates to an added $150 billion in new taxes worldwide.

The announcement was made at an OECD meeting in Brussels Friday (Oct. 8).

The agreement has been endorsed by 136 of the 140 member countries, including the U.S., who together represent more than 90% of global gross domestic products.

What is being billed as the “two-pillar solution” tax agreement will be delivered to the G20 Finance Ministers, who are meeting in Washington, D.C., Oct. 13, and to the G20 Summit in Rome at month's end.

The Computer & Communications Association, whose members are no fans of digital services taxes, were pleased with the "clear obligation on all parties" not to establish digital services taxes or eliminate them if they already have.

Another fan of the agreement was the occupant of 1600 Pennsylvania Ave.

“Today’s agreement shows how American leadership and diplomacy is advancing the economic interests of American working families,” said President Joe Biden, suggesting it was diplomacy on the part of his administration, particularly Treasury Secretary Janet Yellen. “For decades, American workers and taxpayers have paid the price for a tax system that has rewarded multinational corporations for shipping jobs and profits overseas. … Establishing, for the first time in history, a strong global minimum tax will finally even the playing field for American workers and taxpayers, along with the rest of the world … to ensure that profitable corporations pay their fair share, and provide governments with the resources to invest in their workers and economies.”

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.