(Global Tax Deal, in Bed with Mrs Market, Part 4)
by A. Irmanputra Sidin, PhD in Constitutional Law/ Constitutional Lawyer
Jakarta, February, 9, 2025
I still remember approximately, 30 years ago I am surprised about internet and knew about Email, Yahoo, MIrC, Yahoo Messenger, Friendster, and then now Facebook, Instagram, X, Whats Up, TikTok, Netflix, Amazon and Youtube. Every day its easy to utilize that platforms because its always available in a phone in every pocket of our friends. That phones is not just a tool of communication like what a phone was 30 years ago, smartphones more likely a tiny market in your pocket but contains offering huge of goods and services in the world you can consume, buy and sell.
We need only fingers to type and click and at the same time, every second “ads” would shown in your smartphones, so many distractions ready to seduce you to built your consumerism character. That is “the market”, that is the technology that came from US, That businesses behind platform drives and determined by Elon Musk, Mark Zuckerberg, Pachai etc. The countries and the people where its operated do not know where is the physical presence and how they works every day.
That is the technology, digital market that never imagined before by Ancient Rome when they levied taxes to their citizen’s and businesses. You could buy and sell now from your home and the seller or buyer maybe in other territorial in the countries. Not only that, you can even buy both national and foreign companies, just open the stocks market and buy the companies’s stocks.
Now, Meta (Instagram, Facebook, Whats Up), X (twitter), Tik Tok , Amazon has been done that, they created mutual benefit of human being, you could communicate each other or even yelling and fight over each other and the market keep flying around on its platform. That is money, that is income, that is earnings for tech businesses.
What happened for all countries, that has been flooded by the digital market, suddenly in every pocket, of their citizens available a tiny market, a digital market an infinite market. The market, could absorbs all incomes of the citizens outflow throughout other territories caused by availability of all the goods and services that every time “flirting”. The Government did not know where are their physical presence as a businesses entity, who are the persons manage, nothings of the businesses entities regester and formed in jurisdiction of the countries which has sovereignty .
Mrs market, the market compete each other, and no barrier, including no levy taxes from the authority of that countries which the citizens of the countries as the users. Every countries should have the rights to impose corporates income tax from the market which emerge in their countries territory, even though tax rates is negotiable depends on the policies in each countries. This phenomenon of the digitalized and globalized world economy keep going increased.
This is one of the explanation of why so many countries are mindful about it, and finally it has drive Mr Presidents of all countries that they should make an agreement to find solution, for the best way for each countries to protect all national interests. They joined and cooperated the one of the organizations is The OECD (Organisation for Economic Co-operation and Development)
OECD and Global Tax Deal
The OECD (Organization for Economic Co-operation and Development) is a forum and knowledge hub for data, analysis and best practices in public policy. They work with over 100 countries across the world to build stronger, fairer and cleaner societies – helping to shape better policies for better lives. They work closely with policy makers, stakeholders and citizens to establish evidence-based international standards and to find solutions to social, economic and environmental challenges and one of, is fighting international tax evasion.[1]
The question is what kind of the Global Tax agreement of OECD that no force again in US on Trump Memorandum? There are two pillars from Global tax Deal, Pillar One of the OECD’s global tax framework is designed to reallocate taxing rights over large multinational enterprises (MNEs), particularly digital companies, by shifting part of their profits to market jurisdictions where they have significant customer bases, even if they have no physical presence there.[2]
Pillar Two sets a global minimum corporate tax rate of 15%, designed to limit tax competition between countries and curb profit shifting to tax havens. Under this pillar, multinational corporations with revenues exceeding €750 million would be subject to a top-up tax if their effective tax rate falls below 15% in any jurisdiction. This framework ensures that all profits are taxed at a minimum rate, reducing the incentive for companies to move their income to low-tax countries.[3]
What does it mean “fighting international tax evasion” according to mission from OECD from perspective of the tech companies?. The Titan Tech might assume that there is no law existed before about the tax that their agreed on under their national law and international law, even every countries in the world never imagined before. The Government are difficult to make laws only relied on with their imagination that someday any businesses from outside countries which would operated in our market even it businesses have no physical presence in our countries jurisdiction they should pay tax as a businesses entities (Corporate Income Tax). The political power of the countries never imagined about digitalized economy and globalized market, even though they could enacted the law about that corporate income tax, Mr Presidents of the countries should cooperate with other Mr President from that businesses origin, and no guarantee the House of Representative from it’s businesses origin will consent for the deal.
To be continue…
Next
*Featured Photo : CATO Institute*
[1] The OECD: Better policies for better lives, https://www.oecd.org
[2] Christopher AHN, October 8, 2024, Taxing the Digital Giants: What the OECD Global Tax Deal Means for the U.S. https://news.law.fordham.edu/jcfl/2024/10/08/taxing-the-digital-giants-what-the-oecd-global-tax-deal-means-for-the-u-s/#_ftn22
[3] ibid
