UN Launches Own Digital Tax Research

May 22, 2018 International Tax Cooperation

Digital taxNEW YORK – The UN will is starting its research on the taxation of large multinational enterprises, with a focus on their impact on developing countries, despite similar work already being conducted by the EU and OECD.

Last week the UN decided that it will begin work on new rules and guides for the taxation of the worldwide digital economy and multinational enterprises, and it will not await the completion of investigations on the same subject from the Organization for Economic Cooperation and Development.

Many international organizations and national governments are currently scrambling to find an appropriate method of taxing large multinational enterprises operating in several countries.

The multinational enterprises are accused of operating internationally and deriving income around the world, while shifting the profits to low-tax jurisdictions and only paying minimal tax in the countries where they made profit.

The OECD and the EU are currently working on potential digital taxes which could see applicable businesses charged a tax in each country on the revenues earned from taxpayers in that country.

The UN has decided that while some of the work conducted already by organizations may be useful in the formulation of its own plan for the taxation of multinational enterprises, it will not await the completion of others’ research before starting its own.

The decision was justified by the fact that the UN approach will likely concentrate on the impact and practicality of the tax in the context of developing countries, and not just developed nations.