This is what global tax reforms will mean for Asia's tech giants
来源:World Economic Forum;发表于:2022-02-26;人气指数:404
This is
what global tax reforms will mean for Asia's tech giants
https://www.weforum.org/agenda/2021/09/tax-asia-investment-tech-industry/
Investment hubs such
as Singapore and Hong Kong SAR could lose up to 0.15% of GDP as a result.
Image: Unsplash/
Swapnil Bapat
21 Sep 2021
Dinar Prihardini
Economist , Tax Policy
Division in the Fiscal Affairs Department of the International Monetary Fund
Andrew Hodge
Economist , IMF’s
Western Hemisphere Department
Ruud de Mooij
Era Dabla-Norris
Division Chief, Asia
Pacific Department, International Monetary Fund (IMF)
*Asia’s advanced and
emerging market economies have several locally headquartered tech giants and
host foreign companies.
*So far, it’s been
challenging for many Asian countries to tax tech giants because many are not
physically but rather only digitally present in a country.
*A new set of agreed
global tax reforms will change where these tech giants and other global giants
pay taxes, explain experts from the IMF.
*Investment hubs such
as Singapore and Hong Kong SAR could lose up to 0.15% of GDP as a result.
New global reforms
will change where tech giants pay taxes in Asia and make the international
tax system more robust.
Digitalization —the technology that powers fintech, e-commerce,
and online services—enables us to make mobile money transfers, purchase goods
and services online, and interact with people across the globe. It has created
some of the largest global businesses, such as online platforms and
marketplaces connecting producers and consumers across the world.
Asia alone has
roughly two billion internet users, with considerable room to grow. Asia’s
advanced and emerging market economies have several locally headquartered tech
giants—including Alibaba, JD.com, Tencent, Rakuten—and host foreign tech giants
such as Facebook. A new set of agreed global tax reforms will change where
these tech giants and other global giants pay taxes.
Asia has a large
share of tech giants.
Image: IMF
Thus far, it’s been
challenging for many Asian countries to tax tech giants especially because many
are not physically but rather only digitally present in a country. Existing
international norms for taxing profits, which many people consider to be
outdated and unfair, haven’t kept up. Collecting taxes on cross-border digital
services and small parcel e-commerce deliveries is also a challenge.
Changes afoot
Some Asian countries
have started to introduce digital services taxes—withholding taxes
on payments for cross-border digital services or user-based turnover taxes on
digital activities. These, however, may become redundant if a new global system
for profit taxation is adopted.
As of August 2021,
the United States and most major Asian economies were among the 134 members of
the Inclusive Framework led by the Organization for Economic Co-operation and
Development (OECD-IF), agreeing to allocate taxing rights on profits to
countries where consumers and users are located, reflecting the digital
presence. Details are still under discussion, but under the agreed global
reforms, a portion of profits from multinationals with global sales above EUR20
billion (roughly the 100 largest global companies) will be allocated across
countries in proportion to local sales and taxed under local laws.
In a new IMF
staff paper, we survey the digital landscape in Asia and the effect of
proposals, such as that from the OECD-IF, on corporate tax revenue across Asian
countries. We also outline the pros and cons of digital services taxes and
estimate their revenue potential. Finally, we calculate the potential
additional revenue gains from collecting value-added tax on digital services
and cross-border e‑commerce sales of goods.
Investment hubs such
as Singapore and Hong Kong SAR could lose up to 0.15 percent of GDP in
corporate tax revenue because the profits currently declared in these countries
by multinationals exceed the local share of total sales. Whereas high-income
countries with large domestic markets—Australia, China, Japan, Korea—would gain
revenue, developing countries such as Vietnam could lose revenue.
The agreed changes
could spur more comprehensive reforms applied to all companies and to a larger
share of profits. That would cause a much larger reallocation of tax revenue
across countries, with the largest losses expected for investment hubs in Asia
and expected gains for several developing economies.
There are expected
gains for several developing economies.
Image: IMF
Digital services
taxes—although easier to implement—don’t raise much revenue and have other
drawbacks. A digital services tax similar to India’s Equalization Levy would
have yielded only 0.02 percent of GDP in 2019 for Bangladesh, Indonesia, the
Philippines, and Vietnam. Digital services taxes can also distort business
decisions and still be vulnerable to tax avoidance. Moreover, they can
complicate trade relations, because they are usually applied only to large
firms headquartered abroad.
Value-added taxes and
digitalization
More than half of all
services trade in Asia is digitally delivered, making it hard to collect
value-added taxes when these services cross borders. Cross-border e-commerce sales
of goods have also been exempt from value-added taxes when shipped
internationally in small parcels.
Resolving these
challenges pays off. Requiring nonresident suppliers of digital services and e‑commerce
marketplaces to register with local tax authorities and remit value-added taxes
on their sales could raise revenue between 0.04 and 0.11 percent of GDP in some
countries in Asia, translating to an additional $166 million in Bangladesh,
$4.8 billion in India, $1.1 billion in Indonesia, $365 million in the
Philippines, and $264 million in Vietnam.
The road ahead
As Asian consumers
and businesses increase their online activity in the coming years, tech giants
will expand further into Asian countries, making taxation in a digitalizing
economy even more important. Countries in Asia, in particular, can invest in
ways to harness digitalization for tax administration helping to reduce tax
evasion, boost revenue mobilization, and make tax collection more efficient.
With countries further shaping the agreement in the OECD-led Inclusive
Framework, the fundamental reforms that lie ahead may make the international
tax system more robust for the digital age.