‘Digital companies’ will not be above the law, says OECD tax chief

An OECD task force has concluded that ‘designing special tax rules for internet companies would not be viable, given the growing digital presence in large parts of the economy’, the Financial Times reported this morning.

The paper quoted Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration, as saying: ‘The findings are that there is no such thing as digital companies rather than digitalisation of the economy. There may not be therefore a solution for the digital economy but we will need to draw on features of digital economy when we revise the system. Most of the tax planning by these companies will be addressed by this.’

Joel Hills of Sky News put it to Saint-Amans this afternoon that people would read his remarks as suggesting that ‘internet companies operate above the tax system’. Saint-Amans replied: ‘That’s wrong. Actually, what I mean is that the problem of the digital economy is across the board.’

The whole economy had been ‘contaminated’ by digitalisation, he said. ‘We need to be very strong in fixing the system.’

The FT report said HM Treasury had voiced support for the OECD’s stance, calling for ‘common principles’ to apply whether companies operate online or from physical premises.

As I reported for Tax Journal last week, respondents to an OECD consultation pointed out that there was no separate ‘digital economy’. The CIOT said digital businesses were ‘not sufficiently different’ from non-digital businesses to merit a distinct set of rules.

But none of this suggests that the FT’s first sentence – “Proposals for a tax crackdown on digital companies such as Google and Amazon are to be dropped … ” – is a fair summary of what is about to happen.