“Tax Challenges of the Digital Economy” : comments on the OECD’s public consultation
Indeed, the federation considers that the isolation of the digital economy is not envisageable currently, and will not be possible in the future as the digital is spreading to all sectors. In tax matters, economic actors require stability, predictability and a uniform system across countries in order to avoid optimisation.
As a result, the Federation considers, as the Task Force of the OECD, that the Ottawa framework conditions on the taxation of electronic commerce must be followed : The tax treatment of digital goods and services must be neutral and equitable with regard to conventional activities in order to avoid creating an imbalance that would be advantageous to one activity over another.It must be clear and simple, efficient and fair, flexible and dynamic as defined in pages 63 and 64 of the Discussion Draft of the OECD. Considering the volatility and the extraordinary speed of the evolution of the digital activities, the FFTélécoms is in favour of defining a body of ‘intangible’ rules, but with application criteria that would adapt with time, in order to take into account the transformation of economic exchanges triggered by technological evolutions and the transformation of economic models.
The Federation would like to congratulate the Task Force on its overview of the potential options and recalls the need for the Task Force to rapidly put in place measures in order to put an end to the unfair competition currently taking place to the advantage of some businesses that locate the value created in and by countries where consumption takes place in tax havens. This occurs to the detriment of public finances, including in countries that contribute to the aggressive tax planning allowing double non-taxation. This short time-frame appears to us to be essential in a global economy where dematerialisation of exchanges is accelerating and profoundly distorting or destroying entire segments of countries’ economies that are confronted with aggressive tax optimisation practices.
Finally, the FFTélécoms welcomes the positive work on the redefining of the permanent establishment criteria for “fully dematerialised digital activity” introducing the concept of “significant digital presence” in the countries where consumption takes place, as well as the tentative definition of “virtual permanent establishment”. Whether a new concept of virtual permanent establishment is introduced or whether the criteria of a permanent establishment are defined or any other progressive solution, it appears essential to us that the criteria for defining these concepts be simple, and particularly robust and tested in multiple configurations (by conducting test cases). This will ensure that the criteria apply to all business and attain the objective of re-establishing fair competition, the foundation of economic growth and exchange in the global economy.