10 October 2017


CBI responds to OECD tax digitisation consultation

Following multiple discussions with business, the CBI will respond to the OECD’s call for evidence on taxation of the digitised economy.

CBI responds to OECD tax digitisation consultation

There’s renewed debate within the EU about how to increase tax take from digital businesses who make supplies to consumers in the EU market. Some of EU member states feel strongly that insufficient tax is raised and have put forward proposals for an “equalisation levy” paid on turnover instead of profits which they believe could address the perceived problem.

The EU is only one group of countries participating in this global debate. Simultaneous to the EU conversations, the OECD is recommencing their work on the same topic. Following work undertaken between 2013 and 2015 on preventing Base Erosion and Profit Shifting (BEPS), the OECD concluded that it would be difficult, if not impossible, to ring fence the digital economy for tax purposes.

Some countries have already implemented unilateral measures, e.g. the UK Diverted Profits Tax and the Indian equalisation levy. More countries are now proposing to do the same (e.g. the EU proposals) and so the OECD work is recommencing at some pace.

We have seen a flurry of activity this autumn and have participated in meetings on the EU activity with the Finance Ministry of Estonia (who have presidency of the European Council until December) and meetings between the OECD and businesses.

Most recently, the OECD released a call for evidence on digital business models, the impact they have on tax policy and the split of taxing rights between countries as well as views on the unilateral country measures which have been proposed. The three-week consultation window for closes on 13 October and the CBI is currently finalising its submission with members. To request a copy of the CBI’s full response, or for more information please contact Charlotte Fox.