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Zuckerberg admits Facebook will have to pay more taxes

UNITED STATES (OBSERVATORY NEWS) — Facebook head Mark Zuckerberg admits that global tax reforms mean that the social media giant may have to pay more taxes in different countries, Politico reports citing excerpts from a speech it should deliver on Saturday.

Cross-border tax rules should be rewritten after last month 137 states tried to avoid a new trade war due to the global increase in taxes on digital services.

“We agree that [reforms] may mean that we will have to pay more taxes and pay them in different places under the new legislation,” the publication quoted the words from Zuckerberg’s upcoming speech, which he is expected to deliver at the Munich Security Conference. reports Politico.

Government officials have agreed to discuss new tax rules and profit margins for companies that do not have a physical presence in the market, but nonetheless serve citizens, the Organization for Economic Co-operation and Development (OECD) said last month.

“I understand that there is disappointment about how technology companies are taxed in Europe. We also want tax reform, and I am glad that the OECD is considering this issue,” Politico quoted Zuckerberg planned speech.

Amazon, Facebook and Google most often take profits and pay taxes in low tax countries such as Ireland, regardless of where their customers are located.

An increasing number of countries are drafting national tax laws due to the lack of a global revision of the rules, despite Washington’s threat of retaliation against trade tariffs.

So, last fall in France, a bill was passed on the introduction of the “GAFA tax” (the abbreviation stands for Google, Apple, Facebook and Amazon), which provides for the introduction of an additional tax of 3% of the revenue of international technology companies received by them in France. It covers only those companies whose annual turnover is at least € 750 million, while at least € 25 million of which must be received in France.

Later, a similar law was adopted in Italy – only there it applies to companies earning in Italy at least € 5.5 million.

This decision caused serious criticism from Washington, and US President Donald Trump announced the possibility of introducing a tax on French wine. Later, French President Emmanuel Macron promised that as soon as the digital tax is introduced at the international level, France will abolish its tax.

The office of the US sales representative said that the French tax is aimed specifically at American companies, since it applies to those services where US IT firms dominate.

Officials intend to reach an agreement by the end of 2020. If the OECD agreement is not signed, then the European authorities will push for the adoption of the relevant bill at the EU level.

Many countries complain that US technology companies pay too little income tax in the territories where they have users, and so far most of them have refrained from levying their own national taxes. However, some European countries, such as Great Britain or Canada, are potentially ready to introduce a new tax regime for US IT companies.

The Wall Street Journal recently published a letter that US Treasury Secretary Stephen Mnuchin sent to the Organization for Economic Co-operation and Development. According to the text of the document, the United States has serious concerns regarding changes in mandatory rules when countries have the right to establish taxation for individual companies.

This could affect the established foundations of the international tax system, on which American taxpayers rely, Mnuchin writes. The head of the Ministry of Finance called on OECD countries to stop applying digital taxes.

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