Centre asks MNCs for feedback on OECD proposal of global digital tax: Report

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The Centre has reached out to multi-national companies (MNCs) inquiring about their concerns regarding the Organisation for Economic Co-operation and Development’s proposal to charge cross-jurisdiction tax under the Base Erosion and Profit Shifting (BEPS) framework.

India is required to submit its suggestions on the same to the OECD by December and has asked MNCs for their inputs before formulating a reply, The Economic Times reported.

MNCs however are planning to make direct representations to the OECD asking for the current system to stay and have thus ignored the Indian government’s overtures, a source told the paper.

Moneycontrol could not independently verify the report.

Among issues the Centre has sought feedback on is the OECD’s Pillar-1 and Pillar-2 approaches.

Pillar-1 deals with profit allocation by digital companies and which country has the right to tax them first; while Pillar-2 proposes a mechanism to calculate tax per jurisdiction to be charged from the total profit pool, the report said.

This comes as large companies have been found to evade tax in various countries using complex holding structures. OECD is looking to “bring large economies on one page under BEPS,” it noted.

Large corporations such as Amazon, Facebook, Google, LinkedIn and Netflix could face more domestic tax liability under the new proposed system, and will likely boost countries like India in their plans to tax digital companies. Smaller companies and startups with lower revenue levels may however still escape the net.

The OECD’s framework was earlier expected in December 2020, but is now pushed to mid-2021. The United States on its part has pushed back against attempts by other countries to tax its companies. Meanwhile, industry trackers say the issue is worth $100 billion.