Latest news with #internationaltax
Zawya
5 days ago
- Business
- Zawya
Kenya: Make digital giants pay their fair share of taxes
The current international tax sys- tem on digital systems, inher- ited from the 20th century, taxes the factory, not the algorithm. It recognises warehouses, butignores clouds. As a result, the 10 largest platforms (Google, Apple, Meta, TikTok, etc.) generated more than $500bn in rev- enue in 2023, largely escaping taxation. In many developing countries, they pay a tiny fraction of what they should. Meanwhile, tax revenues are eroding, inequalities are widening, and states are losing their means of action. The OECD Agreement, which was sup- posed to tax profits where the users are located and introduce a global minimum tax, has stalled. The US Congress blocked its ratification, and the new Trump ad- ministration buried it by withdrawing the US from the process. Taxation has become a foreign policy tool. This legal vacuum encourages uni- lateral tax measures. Several countries are maintaining or considering their own digital taxes, in the absence of a multilat- eral framework. But the American pressure is formidable: India, a pioneer in this area, announced on 1 April that it was abandon- ing its tax on non-resident companies that earn digital advertising revenue from Indican businesses (2%, yielding €440m in 2022), under the threat of trade reprisals. In Africa, the stakes are high. Accord- ing to the Economic Commission for Af- rica, the continent could lose up to 30% of its VAT revenue by 2030 if nothing is done. Tax administrations, such as that of Kenya, are struggling to trace the digital flows that pass through Amsterdam before disappearing into the Virgin Islands. Governments are under pressure from their people, who are revolting because of the unbearable tax burden, as in the DRC or Kenya. Small taxpayers pay for everyone: how can it be justified that a farmer is taxed on his livestock income, while a multinational raking in millions is exempt? But Africa is not standing by and doing nothing. Kenya introduced a 1.5% tax on the turnover of digital platforms, supple- mented by 16% digital VAT, for an accrual of $78m in 2023. Nigeria has introduced a similar tax framework. These simple and effective models protect local non-digital SMEs while restoring tax equity. These are not 'anti-GAMAM' (Google, Amazon, Meta, Apple, and Microsoft) taxes, but transitional, non-discriminatory measures pending a global agreement. In Europe too, digital taxes have borne fruit, bringing in €350m for France, £430m for the UK. But they are now being tar- geted by Washington. In London, there is a parliamentary debate: should such taxation be maintained despite the threat of sanctions and perhaps bigger tariffs, when the country is planning large budget cuts by 2030? Faced with this impasse, a new bal-ance is possible. In 2024, 110 countries supported a UN framework convention on taxation. Its objectives are to intro- duce a withholding tax on digital services, integrated into bilateral tax treaties; to guarantee egalitarian governance (one country, one vote); and to strengthen the capacity of Southern countries to trace and tax digital flows. This dynamic could take shape in a North–South forum, backed by the UN, with three key missions: pooling good tax practices; coordinating transitional taxes to avoid a disorderly proliferation; and strengthening administrative and technological capacities, particularly with regard to the traceability of digital flows. Pivotal role Europe has a pivotal role to play. On the heels of American tariffs, it has announced the possibility of a tax on American digital services. This wake-up call is beneficial and could inspire many countries in the Global South if a coalition were to form. Europe must maintain diplomatic pressure on Washington to revive the multilateral agreement, while co-constructing an al- ternative with the emerging powers within the framework of this North-South forum. This agile minilateralism – led by India, Brazil, Nigeria, South Africa and Europe (UK and EU) – could structure a post-Western, more balanced and more le- gitimate governance of digital technology. Digital flows are still escaping the tax radar, but not the appetite of the giants. It is time to rewrite the rules of the game. Taxing digital technology does not mean holding back innovation: it means restor- ing fiscal justice, protecting states and reaffirming a fundamental principle – sovereignty is not negotiable. n Abdelmalek Riad, an economist, is Vice- President of Asoria, a digital economy taxa- tion platform. The 10 largest platforms (Google, Apple, Meta, etc.) generated over $500bn in revenue in 2023, but mostly escaped tax. © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. ( By Abdelmalek Riad
Zawya
01-07-2025
- Business
- Zawya
Africa: Make digital giants pay their fair share of taxes
The current international tax sys- tem on digital systems, inher- ited from the 20th century, taxes the factory, not the algorithm. It recognises warehouses, butignores clouds. As a result, the 10 largest platforms (Google, Apple, Meta, TikTok, etc.) generated more than $500bn in rev- enue in 2023, largely escaping taxation. In many developing countries, they pay a tiny fraction of what they should. Meanwhile, tax revenues are eroding, inequalities are widening, and states are losing their means of action. The OECD Agreement, which was sup- posed to tax profits where the users are located and introduce a global minimum tax, has stalled. The US Congress blocked its ratification, and the new Trump ad- ministration buried it by withdrawing the US from the process. Taxation has become a foreign policy tool. This legal vacuum encourages uni- lateral tax measures. Several countries are maintaining or considering their own digital taxes, in the absence of a multilat- eral framework. But the American pressure is formidable: India, a pioneer in this area, announced on 1 April that it was abandon- ing its tax on non-resident companies that earn digital advertising revenue from Indican businesses (2%, yielding €440m in 2022), under the threat of trade reprisals. In Africa, the stakes are high. Accord- ing to the Economic Commission for Af- rica, the continent could lose up to 30% of its VAT revenue by 2030 if nothing is done. Tax administrations, such as that of Kenya, are struggling to trace the digital flows that pass through Amsterdam before disappearing into the Virgin Islands. Governments are under pressure from their people, who are revolting because of the unbearable tax burden, as in the DRC or Kenya. Small taxpayers pay for everyone: how can it be justified that a farmer is taxed on his livestock income, while a multinational raking in millions is exempt? But Africa is not standing by and doing nothing. Kenya introduced a 1.5% tax on the turnover of digital platforms, supple- mented by 16% digital VAT, for an accrual of $78m in 2023. Nigeria has introduced a similar tax framework. These simple and effective models protect local non-digital SMEs while restoring tax equity. These are not 'anti-GAMAM' (Google, Amazon, Meta, Apple, and Microsoft) taxes, but transitional, non-discriminatory measures pending a global agreement. In Europe too, digital taxes have borne fruit, bringing in €350m for France, £430m for the UK. But they are now being tar- geted by Washington. In London, there is a parliamentary debate: should such taxation be maintained despite the threat of sanctions and perhaps bigger tariffs, when the country is planning large budget cuts by 2030? Faced with this impasse, a new bal-ance is possible. In 2024, 110 countries supported a UN framework convention on taxation. Its objectives are to intro- duce a withholding tax on digital services, integrated into bilateral tax treaties; to guarantee egalitarian governance (one country, one vote); and to strengthen the capacity of Southern countries to trace and tax digital flows. This dynamic could take shape in a North–South forum, backed by the UN, with three key missions: pooling good tax practices; coordinating transitional taxes to avoid a disorderly proliferation; and strengthening administrative and technological capacities, particularly with regard to the traceability of digital flows. Pivotal role Europe has a pivotal role to play. On the heels of American tariffs, it has announced the possibility of a tax on American digital services. This wake-up call is beneficial and could inspire many countries in the Global South if a coalition were to form. Europe must maintain diplomatic pressure on Washington to revive the multilateral agreement, while co-constructing an al- ternative with the emerging powers within the framework of this North-South forum. This agile minilateralism – led by India, Brazil, Nigeria, South Africa and Europe (UK and EU) – could structure a post-Western, more balanced and more le- gitimate governance of digital technology. Digital flows are still escaping the tax radar, but not the appetite of the giants. It is time to rewrite the rules of the game. Taxing digital technology does not mean holding back innovation: it means restor- ing fiscal justice, protecting states and reaffirming a fundamental principle – sovereignty is not negotiable. n Abdelmalek Riad, an economist, is Vice- President of Asoria, a digital economy taxa- tion platform. The 10 largest platforms (Google, Apple, Meta, etc.) generated over $500bn in revenue in 2023, but mostly escaped tax. © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. (
Yahoo
29-06-2025
- Business
- Yahoo
G7 agrees to avoid higher taxes for US and UK companies
By Harshita Meenaktshi, Bipasha Dey and Promit Mukherjee (Reuters) -The United States and the Group of Seven nations have agreed to support a proposal that would exempt U.S. companies from some components of an existing global agreement, the G7 said in a statement on Saturday. The group has created a "side-by-side" system in response to the U.S. administration agreeing to scrap the Section 899 retaliatory tax proposal from President Donald Trump's tax and spending bill, it said in a statement from Canada, the head of the rolling G7 presidency. The G7 said the plan recognizes existing U.S. minimum tax laws and aims to bring more stability to the international tax system. The U.S Treasury Department said that following the removal of Section 899 from the U.S. Senate version of the tax and spending bill, there is a shared understanding that a side-by-side system could preserve important gains made by jurisdictions inside the Inclusive Framework in tackling base erosion and profit shifting. "We look forward to discussing and developing this understanding within the Inclusive Framework," the Department said in a post on X on Saturday. UK businesses are also spared higher taxes after the removal of Section 899 from President Donald Trump's tax and spending bill. Britain said businesses would benefit from greater certainty and stability following the agreement. Some British businesses had in recent weeks said they were worried about paying substantial additional tax due to the inclusion of Section 899, which has now been removed. "Today's agreement provides much-needed certainty and stability for those businesses after they had raised their concerns," finance minister Rachel Reeves said in a statement, adding that more work was needed to tackle aggressive tax planning and avoidance. G7 officials said that they look forward to discussing a solution that is "acceptable and implementable to all". In January, through an executive order, Trump declared that the global corporate minimum tax deal was not applicable in the U.S., effectively pulling out of the landmark 2021 arrangement negotiated by the Biden administration with nearly 140 countries. He also vowed to impose a retaliatory tax against countries that impose taxes on U.S. firms under the 2021 global tax agreement. This tax was considered detrimental to many foreign companies operating in the U.S.
Globe and Mail
28-06-2025
- Business
- Globe and Mail
G7 agrees to exempt U.S. companies from higher taxes
The United States and the Group of Seven nations have agreed to support a proposal that would exempt U.S. companies from some components of an existing global agreement, the G7 said in a statement on Saturday. The group has created a 'side-by-side' system in response to the U.S. administration agreeing to scrap the Section 899 retaliatory tax proposal from President Donald Trump's tax and spending bill, it said in a statement from Canada, the head of the rolling G7 presidency. The G7 said the plan recognizes existing U.S. minimum tax laws and aims to bring more stability to the international tax system. Opinion: The G7 is dead – time to move on to the G6 U.K. businesses are also spared higher taxes after the removal of Section 899 from Mr. Trump's tax and spending bill. Britain said businesses would benefit from greater certainty and stability following the agreement. Some British businesses had in recent weeks said they were worried about paying substantial additional tax due to the inclusion of Section 899, which has now been removed. 'Today's agreement provides much-needed certainty and stability for those businesses after they had raised their concerns,' Britain's finance minister Rachel Reeves said in a statement, adding that more work was needed to tackle aggressive tax planning and avoidance. G7 officials said that they look forward to discussing a solution that is 'acceptable and implementable to all.' In January, through an executive order, Trump declared that the global corporate minimum tax deal was not applicable in the U.S., effectively pulling out of the landmark 2021 arrangement negotiated by the Biden administration with nearly 140 countries. He had also vowed to impose a retaliatory tax against countries that impose taxes on U.S. firms under the 2021 global tax agreement. This tax was considered detrimental to many foreign companies operating in the U.S.
Forbes
26-06-2025
- Business
- Forbes
Crisis Averted—But What Was The Section 899 Revenge Tax Proposal?
WASHINGTON, DC - APRIL 23: U.S. Treasury Secretary Scott Bessent delivers remarks during the ... More International Finance Institute Global Outlook Forum at the Willard InterContinental Washington on April 23, 2025 in Washington, DC. The forum is being held alongside the 2025 spring meetings of the World Bank Group (WBG) and International Monetary Fund (IMF). (Photo by) There are myriad ways to express displeasure with international tax policy: you can file a complaint at the Organisation for Economic Co-operation and Development (OECD), leverage a charm offensive, or, if you're looking for a quick fix, you can slap a retaliatory tax on foreign investors, spook the market, and call it a day. The Trump administration opted for the latter—albeit briefly—with the seemingly now-defunct Section 899 provision, branded by some as the 'revenge tax.' This provision, tucked into the One Big Beautiful Bill Act, levied a targeted tax meant to punish countries that impose 'discriminatory' taxes on American firms – particularly tech giants. Now however, after some handshakes and a flurry of posts on social media, it seems the revenge tax has been scrapped. Quietly scuttled, its political usefulness exhausted—for now. What Was the Section 899 'Revenge Tax?' At its core, Section 899 was a legislative jab aimed squarely at America's trading partners. Buried in the GOP's sweeping policy bill, the provision would have authorized the U.S. to impose punitive taxes on companies headquartered in countries that were, in the view of the Trump administration, treating American firms unfairly. The sweeping new section of the tax code would have been titled 'Enforcement of Remedies Against Unfair Foreign Taxes'—not exactly a subtle start. Section 899 didn't go after governments that it felt had treated U.S. firms unfairly, but instead targeted people and businesses with ties to 'discriminatory foreign countries.' That included foreign individuals, corporations not majority-owned by U.S. persons, private foundations and trusts, and just about any other foreign partnership or structure that Treasury didn't like the looks of. The goal was clear: foreign investors from offending jurisdictions were going to be made to feel real economic pain. The core mechanism was an annual ratcheting-up of tax rates by 5% on the U.S. income of 'applicable persons' – everything from dividends and royalties to capital gains and even real estate sales. Exceptions were few – the legislation even explicitly overrode Section 892, which exempts sovereign wealth funds from taxation. The triggering mechanism for the tax was any broadly-defined 'unfair foreign tax,' which included the Undertaxed Profits Rule from OECD's Pillar 2, Digital Services Taxes (DSTs), and any other tax Treasury later deemed discriminatory or deliberately burdensome to U.S. persons. In sum, it would have been sweeping. If passed, Section 899 would have been a weaponization of the tax code into a tool of transparent foreign policy enforcement. It would have marked a sea change in international tax policy, shifting tax rates away from economics and towards the punishment of deemed foreign policy sins. What Prompted this 'Revenge?' Likely the most salient policy shift that triggered this revenge tax was the OECD's Pillar 2. Championed by the Biden administration, Pillar 2 aims to impose a 15% global minimum tax on the profits of multinationals—regardless of where they are headquartered or what markets they serve. On paper, it was intended to end the race to the bottom of low-tax jurisdictions; in practice, it creates a complex web of policies and enforcement rules that can allow foreign governments to tax U.S. companies in situations where the U.S. does not. The Undertaxed Profits Rule allows other countries to claim the ability to tax if a company's home jurisdiction does not sufficiently tax its own domestic entities. Think of it as a foreign state saying, well, if you aren't going to tax your companies at 15%, we'll gladly make up the difference for you. To the Trump administration, this was unacceptable—a path to the European Union skimming revenue from American companies. The final straw was likely the imposition of DSTs—levies aimed at the revenue of tech giants like Meta and Google, often imposed by European countries that have grown tired of waiting for the U.S. to sign on to Pillar 2. Of course, countries considering and ultimately passing DSTs were merely exercising their right to tax American companies selling into their markets—but that is neither here nor there. Why Section 899 Was a Problem—And Why It Died For all its bluster, Section 899 had one main flaw: it was bad policy masquerading as tough politics. From the moment the bill hit the docket, or more accurately folks found it swimming around in the One Big Beautiful Bill Act, alarms went off across the market. As it turns out, foreign investment doesn't like uncertainty. Section 899 would have injected a lot of uncertainty into the foreign investment market. The tax hikes weren't automatic, and there was no schedule that could be consulted by any one individual state; they turned on vague determinations like what was and wasn't an 'unfair tax.' Treasury could label a state a discriminatory foreign country based on opaque criteria and ramp up rates immediately—all without Congress lifting a finger. As is to be expected, trade groups warned of chilling effects on capital markets. Foreign governments viewed it as a backdoor sanctions regime. So it died – not with a bang, but with a post. Scott Bessent publicly called for the provision's removal, citing diplomatic progress. The death of the Revenge Tax doesn't mean this particular international tax skirmish is over, however, only that the battle was paused temporarily in favor of diplomacy. If global talks stall, or DSTs raise their heads again, no one should be surprised if a future Congress pulls out this playbook again.
