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Commonwealth to back talks on taxing e-com to tackle debt

21
Oct '19
Pic: Shutterstock
Pic: Shutterstock
Commonwealth finance ministers have agreed that the group should back ongoing discussions at the Organisation for Economic Co-operation and Development (OECD), particularly on behalf of smaller states, to demand an agreement on digital taxation that could allow countries to tax large technology giants, even if they do not operate within their jurisdictions.

This was decided at an ongoing meeting of the ministers in Washington DC under the theme ‘preventing debt crises: the role of creditors and debtors’.

Revenues from tax collection are important for maintaining debt at sustainable levels, yet can often be impaired by the digitalisation of trade in services, as this often results in countries being unable to determine when, how and where taxes on digital transactions should be collected, according to a press release from the Commonwealth.

“We need a rule-based system that is inclusive, transparent and efficient so that all countries have a means of collecting revenue and are thereby able to avoid accumulating excessive debt. It goes hand in hand with accelerating the gains to be made by addressing climate change and making progress towards achieving the sustainable development goals,” Commonwealth secretary general Patricia Scotland said.

Ministers saw global trade and geopolitical tensions as having ‘intensified’, in a context where global debt has risen to an all-time high, estimated at $19 trillion. They stressed the need to make debt easier to manage for vulnerable countries, and for them to be eligible for periods of relief to stabilise growth during economic shocks.

As seen in the past, disasters can push countries into taking on emergency loans to rebuild and recover. Such debt can easily become unsustainable for most low and middle-income countries, making them vulnerable to debt distress.

“Disruptive technologies are challenging the financial system by increasing competition and reshaping conventional business models, thereby fuelling the creation of a whole new kind of financial ecosystem,” minister of finance of Cyprus Harris Georgiades, who chaired the meeting, said.

During the meeting, ministers also reviewed a suite of Commonwealth initiatives, including a disaster risk portal, to offer streamlined and integrated information on available funds to respond to disasters, and a fin-tech toolkit to help banks leverage innovation in the financial sector.

The Commonwealth gave a presentation on its flagship debt management system 'Commonwealth Meridian’ which is used by 63 countries to manage their debt which combines to a total of $2.5 trillion.

Fibre2Fashion News Desk (DS)


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