Tech giants face higher tax bills under shake-up


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New tax plans aimed at making global firms pay more tax have been published by an international economic body.

The proposals would give governments more power to tax big technology firms such as Apple, Facebook and Google.

The Organisation for Economic and Development (OECD) proposals would mean big companies paying more tax where they sell products and make profits.

Multinational companies could be liable for tax in places where they have no physical presence.

Companies that do business in more than one country have long been a challenge for tax authorities.

Profit shifting

There is a very obvious incentive to structure their business in a way that minimises their tax bills.

Typically that involves allocating profits to subsidiaries in countries – including so-called tax havens – where corporate tax rates are very low even if they do little business there.

The issue has been highlighted by the growth of big technology companies which can provide services in countries where they have little or no physical presence.

The OECD’s proposal includes news rules on where tax should be paid and on the proportion of their profits that should be taxed in each country.

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