The global economic downturn caused by the coronavirus pandemic is impacting ongoing discussions on how the digital economy will be taxed.
While international negotiators continue to seek agreement on a plan created by the Organization for Economic Cooperation and Development (OECD), some participants remain skeptical that consensus can be reached from more than 130 countries by year’s end. The plan for a global minimum tax is focused on allocating more tax revenue from big tech companies and other multinationals to countries where those corporations have a large market presence. That means some countries are going to see more tax revenue under the plan than others.
Because most of the multinational companies that would be impacted are based in the U.S., the Trump administration has said the tax unfairly targets American companies like Apple, Amazon, Facebook and Google. Treasury Secretary Steven Mnuchin has requested changes in the OECD framework that would allow some American companies to opt out of those taxes. Corporate losses experienced by multinationals during the COVID-19 pandemic have companies seeking reassurances that they could offset some of their future taxes with losses from this year.