Telecoms lobby groups call for exemptions from new tax rules
They insist that telecom firms already face more taxes than other multinationals
GSMA and the European Telecommunications Network Operators' Association (ETNO) have requested their members be offered exemptions from proposed global tax rules, which aim to ensure large multinational companies (MNCs) pay their fair share in the countries in which they operate.
Last month, the G20 group and the Organization for Economic Cooperation and Development (OECD) approved a global corporate tax of at least 15 per cent to be imposed on MNCs, with an aim of ending tax havens.
The approval came following endorsement from 132 countries and territories, who joined the 'two-pillar plan' to end the global competition to offer the lowest corporate tax rate. Many countries do this to attract investment from giant corporations like Amazon.
In June, members of the G7 countries agreed the outline of the global tax agreement. Their aim was to deter multinational firms from evading taxes by filing profits in low-rate countries like Ireland and Luxembourg.
The GSMA and ETNO say that, while they appreciate the spirit of the OECD/G20 Inclusive Framework agreement, their members should be exempt because they already pay 'lots' of tax - including some that other entities do not pay.
'The framework has shifted from its original purpose of levying taxes on digital services in jurisdictions where the customer resides, to a broad application that potentially subjects large multinationals within the telecommunications industry, who already pay their fair share of taxes, to double taxation,' the two groups wrote.
They said that the telecommunications industry already pays corporation income taxes, VAT and spectrum license fees, as well as unilateral Telecommunications Service Taxes (TSTs) in many markets.
The groups noted that while the OECD plan would remove digital services taxes, there was no proposal to remove TSTs, meaning telecoms would effectively pay double tax.
The groups also drew attention to a specific OECD proposal that recommends offering exemptions to some infrastructure services businesses, on the basis that although they may operate in multiple countries, their profits are tied to the countries where their infrastructure is located.
'Developing and maintaining telecommunication infrastructure requires long term investment and a stable investment horizon, and the industry should be entitled to a fair return on its infrastructure investments,' the duo asserted.
The request comes months after a report by the Fair Tax Foundation, which claimed the biggest tech firms in the USA paid almost $100 billion less in taxes than stated in their annual reports over the past decade.
The campaign group said the 'Silicon Six' (Amazon, Apple, Facebook, Microsoft, Netflix and Google's owner Alphabet) paid nearly $219 billion in income taxes from 2011 to 2020: about 3.6 per cent of their more than $6 trillion in combined revenue.
The report also claimed the six firms paid roughly $149 billion less to global tax authorities than would be expected, had they paid headline rates where they operated.
Amazon and Facebook were named as the worst offenders in tax avoidance.