In France, the first notifications about the introduction of the GAFA tax were sent. Internationally, the Organization for Economic Cooperation and Development (OECD) is negotiating with 130 countries to reform the taxation of the digital sector. In Southeast Asia (ASEAN), the issue of taxing technology companies is also an issue.
“Legislation on the digital economy is being refined as the pandemic leads to an explosion of online activity in ASEAN countries. While traditional companies have fallen to historically low levels due to containment measures, online sales have increased in all ASEAN countries, ”said analysts at the Malaysian group Maybank.
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In Thailand, overseas digital platforms that are not installed through a local subsidiary and whose annual sales exceed $ 57,000 are subject to 7% VAT on their sales. Maybank Kim Eng, the financial group’s broker arm, estimates the tax could generate government revenues of $ 96 million. As of August 2020, Indonesia has levied a 10% tax on the sale of products and services made over the Internet, such as: B. Streaming and mobile applications. In addition, Malaysia has introduced a 6% tax on the services of foreign suppliers with annual sales in excess of US $ 120,000. Finally, a bill was proposed in the Philippines to tax companies with the biggest services like Facebook, Google, YouTube, Netflix and Spotify in order to raise funds to help fight Covid-19.
A coalition of tech giants has criticized these laws
Today corporation tax is levied where a company is physically located and not in the markets it occupies. This situation, unlike local companies, favors foreign services that are tax-evaded. This mechanism is all the more pronounced in the digital sector. In addition, there are various tax optimization methods: “In markets where companies are founded by subsidiaries, they can transfer their profits to a tax haven,” explains Nikkei Asia Abhineet Kaul, head of the public sector in Asia-Pacific for the consulting firm Frost and Sullivan. A lack of uniformity between laws could therefore run counter to these objectives, as is the case in Europe in particular in Luxembourg, the Jersey Islands or Andorra.
The Asia Internet Coalition (AIC), which brings together technology giants like Facebook, Google, Amazon and Grab, a Singaporean access provider, has criticized various governments’ regulations. The AIC highlights that the lack of consensus on a global tax framework could hinder investment, cross-border trade and the access of certain communities to new technologies. The AIC claims that these measures created double taxation and administrative hurdles, and even resulted in threats of sanctions from the United States.
“The cost and complexity of each country creating and enforcing its own laws ultimately touch the pockets of consumers and could potentially deter companies from investing,” concludes Jeff Paine, director of AIC. by Nikkei Asia. The director of Deloitte Malaysia, Senthuran Elalingam, qualifies Jeff Paine’s remarks by stating that “the income of companies in the digital sector should increase rather than decrease”. The AIC director encourages companies to follow the OECD guidelines that today encourage tax collection wherever the customer is. However, as the introduction of the GAFA tax in France shows, this incentive policy has shortcomings.