Finance ministers belonging to the Group of 20 were considering a proposal on Friday to tax tech giants – like Amazon and Apple – in an effort to formulate a unified approach in a new digitalized global economy.
G20 leaders and central bankers gave the green light to the new rules – based on a framework released by the Organisation for Economic Co-operation and Development earlier this month – while meeting in Washington on Friday, as reported by The Financial Times.
Under that proposal, companies would be required to pay more in corporate taxes to countries where they sell products even if they do not physically operate there. Tax rates, however, have yet to be decided.
Only companies with annual revenue of $825 million or more would be affected.
The OECD is taking public comments on the proposal through Nov. 12. The goal is to have a rule in place next year.
Part of the drive for the new rules is to prevent large technology companies, like Amazon and Apple, from dodging tax obligations by routing profits through tax havens where they have little presence.
While tech companies may be the most well-known target, the tax would apply to multinationals from other sectors, too.
As it stands now, individual countries are forging ahead with their own taxes on tech companies. The international rules would prevent a patchwork of different tax laws from countries across the globe.
France, for example, approved a digital tax, to the dismay of the White House. President Trump threatened to impose tariffs in retaliation. The two sides have since resolved the dispute.
Trump also threatened to retaliate against Italy after Reuters reported it is preparing a digital tax.