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Chambers UK

Digital tax and the US

05 December 2019

In the last couple of days we have seen a flurry of activity in both the US and the OECD in terms of the US responding to the OECD’s recent proposals to tax the large tech companies.

One of the fundamental changes being proposed within the OECD’s proposals is the concept of providing tax rights to countries into which the tech companies are marketing, by way of various accounting formulae.

Currently taxing rights will generally sit with the resident country of the relevant tech company. In many cases this will be the US.

It is therefore not unsurprising to see the US challenging such proposals. Interestingly, the OECD has invited the US to Paris at short notice to try and make a break-through to what is essentially a political issue.

Gary Ashford, Private Capital and Tax partner (non-lawyer) said: “I think everyone expected the US and possibly other countries to oppose some of the proposals, it will be interesting to see if a compromise can be found.

“The big risk to the international tax model, is that if an agreement cannot be reached, individual countries will continue to take unilateral action. We have already seen France move to tax digital services and the UK has issued its own proposals to bring in such a tax from April 2020.”

You can read Gary’s coverage on the topic below:

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