The Strategist

Tech giants face additional expenses in Latin America and Asia

10/30/2018 - 11:54

Latin American countries, including Mexico and Chile, as well as Asia, including South Korea and India, are considering a possibility of introducing new taxes on activities of global high-tech giants such as Google and Facebook, writes The Wall Street Journal.

whiteafrican via flickr
whiteafrican via flickr
New taxes will differ from corporate income taxes that these companies are already paying, and will be calculated as a percentage of the proceeds from the sale of digital services. In addition, in some countries there is talk of introducing taxes on services that collect private data on citizens, for example, in order to show targeted advertising.

A similar proposal was prepared in the EU, but lately it met resistance from individual politicians. However, some European countries, including the UK, have expressed their willingness to impose a tax on digital services unilaterally.

According to experts, the introduction of new taxes can increase costs of digital giants by billions of dollars, because in existing schemes, companies often underestimate the taxable base in individual countries and capture a significant portion of revenues in countries with low taxes.

Thus, according to estimates of the South Korean authorities, international tech giants received 5 trillion won ($ 4.4 billion) in revenue in the country last year, but paid taxes of less than 100 million won.

According to the EU authorities, the introduction of the tax would allow to receive additional revenues in the amount of 5 billion euro annually.